Friday, October 23, 2015

RushCard Ripoff and The Vampire State

Driving home the other day and being atypically uninterested in whatever show the Sirius old time radio station was playing I turned over to a station which was playing Karen Hunter and caught the second half of her interview with Ryan C. Mack, a financial adviser, stock broker and author among other things. The topic of the moment was the financial problems currently going on with the RushCard, a prepaid debit care that has musical entrepreneur and well known celebrity Russell Simmons as an endorser/owner.  His celebrity doesn't matter. What is important is that the RushCard technical infrastructure was having some problems which temporarily (for ten days no less) prevented users of said card from having access to their money. But as Ryan Mack pointed out, considering the not so hidden costs of the RushCard, temporarily losing access to this debit card could be a blessing in disguise to millions if this made them reconsider using the card. Let's explain. As we've pointed out before there is a lot of money to be made from poor people. There's especially a lot of money to be made from poor black people. Although usury is technically outlawed in most states while consumer banks have been under greater legal and regulatory pressure since 2008 to reduce junk fees or at least make them more obvious to the user, there are many other such businesses who skirt or even outright flout usury laws by calling their prices "fees" or "charges" as opposed to interest. These include such institutions as rent-to-own stores, check cashing stores, payday loan stores, and pre-paid debit cards such as the RushCard. Very few people who have true wealth or for that matter even a decent salary which allows them to routinely put money aside are ever caught dead in such places. Very few people with an average to good understanding of personal finances patronize such firms. 

No. These businesses make money from people who are poor, often ignorant of the law or common business practices, are scared to stand up for themselves, or who for whatever reason can't or won't obtain a normal bank or credit union checking account. Unfortunately Russell Simmons has chosen to align himself with a business that makes money this way. Now as Puzo wrote in The Godfather, each man has to measure his own greed. Russell Simmons has a lot of money and wants more. I also want more money. There's nothing wrong with that in and of itself. But before someone does something as massively stupid as getting a RushCard, he or she should at least understand what they're getting for their money. Hint, Russell Simmons is not doing you any favors. Much like Bernie Madoff did with his ethnic group, Simmons is using his in-group and celebrity status to peddle products which are poisonous to personal prosperity. Spending money on nonsense like this is a major reason that black median wealth lags behind white median wealth. Now it's fair to counter that Simmons, like all of us, should be more concerned about his own wealth than someone else's. That is certainly correct. No one should live for other people that he doesn't even know. But just because I don't think someone should always be altruistic doesn't mean I think someone should be given a pass for ripping people off. There is a difference between me being indifferent about your finances and sticking my hands in your pocket to rob you. Here's some examples of some of the fees associated with the RushCard (this is an older example but gives you a great idea of the business model we're dealing with)
If we compare the fees affiliated with the Rushcard compared to the typical bank offered debit card, we can clearly see the advantage of the cards offered by the banking institutions.
Rushcard vs. Typical Bank Card
Activation Fee: Rushcard = $19.95 Typical Bank Card = Free 
Convenience Fee: Rushcard = $1.00 Typical Bank Card = Free 
ATM Cash Withdrawal: Rushcard = $1.95 Typical Bank Card = Free (At Branch) 
ATM Balance Inquiry: Rushcard = $.50 Typical Bank Card = Free 
Bill Payment: Rushcard = $1.00 Typical Bank Card = Free 
Inactivity: Rushcard = $2.95 Typical Bank Card = Free 
Refund of Rushcard/Bank Card via Check: Rushcard = $5.00 Typical Bank Card = Free 
As you see, there is no financial reason for one to choose the Rushcard over a typical banking institution which offers debit cards as a part of their services. With the continuous onslaught of technology, it is becoming increasingly easier to open bank accounts.
Ryan Mack's Open Letter
At every conceivable point of contact between the RushCard and the customer (excuse me that should read sucker) money is removed from the sucker's pocket and transferred into Rush's pocket.  Without fail. And it's not as if Mack was the only person who noticed the shoddy and shady business practices that Russell Simmons was using. Financial columnists have long pointed out the buyer beware nature of the prepaid debit card market. Hopefully as Mack has stated perhaps some people will decide to move on from pre-paid debit cards. Unfortunately some of the people who rightly do so will go to a different rip-off artist, the check cashing store. 
Denise Miller, who works in social services in Philadelphia, has not been able to pay her rent. In an especially embarrassing moment, her card was declined at McDonald’s when she tried to buy breakfast.“I am so angry,” she said. Erica Phillips, a 32-year-old autoworker who lives in the Detroit area, said she first experienced a problem with her RushCard on Oct. 10, when she noticed her money had been moved from her existing account to an expired RushCard account. Her weekly paycheck is loaded on her card by direct deposit, and she said she was unable to access that money all week. “I’ve been borrowing from everyone,” she said. “People at work have given me food.” Ms. Phillips canceled her direct deposit and plans to cash her paycheck this week at a local check-cashing store.
What can be done? I'm not sure there is a legal or regulatory remedy in the short term. The long term solution is of course to build a society in which poor people have more solid financial understanding and are not disproportionately black. The businesses I've listed are basically vultures and hyenas who are attracted to financially sick people. The best thing we can do in the short term is share the information about how these companies work with our brothers and sisters who might be tempted to use these services. Just say no! Ryan Mack video

Speaking of bloodsuckers, whereas Russell Simmons is a figurative one, the State of Alabama in the person of one Circuit Court Judge named Marvin Wiggins (seen on the right in this picture) is a literal bloodsucker. Yes, it seems that old Judge Wiggins, rather than questioning why the state is running what can amount to extortion rackets over petty crimes committed by poor, often black people, has decided to put his own twist on the whole process by requiring indigents to give blood if they are temporarily unable to pay fees, fines or court costs. Now I suppose if you tend to be unsympathetic to lawbreakers you might reason well I guess they shouldn't have broken the law. Leaving aside the idea that having the court take part of your body against your will for a misdemeanor or civil infraction seems at the very least to be unusual and highly unethical, wouldn't you object to this order if the company taking your blood had been found responsible for giving someone HIV from a botched blood transfusion? I mean sure, maybe they've cleaned up their act now. Maybe. But do you want to be the next oops?  MARION, Ala. — Judge Marvin Wiggins’s courtroom was packed on a September morning. The docket listed hundreds of offenders who owed fines or fees for a wide variety of crimes — hunting after dark, assault, drug possession and passing bad checks among them. “Good morning, ladies and gentlemen,” began Judge Wiggins, a circuit judge here in rural Alabama since 1999. “For your consideration, there’s a blood drive outside,” he continued, according to a recording of the hearing. “If you don’t have any money, go out there and give blood and bring in a receipt indicating you gave blood.” 

For those who had no money or did not want to give blood, the judge concluded: “The sheriff has enough handcuffs.” Carl Crocker, who was among those who owed money to the court, recounted seeing one older man pass out after his blood was taken. Another defendant, Traci Green, said that one young man became so angry about the choice he was given that he was taken out of the courtroom. Mr. Crocker, 41, who made the recordings of Judge Wiggins, also recorded the employees of the mobile blood bank, who seemed fully aware of the sentence-reduction arrangement. Mr. Crocker said he grew even more uncomfortable later, after he recognized the blood bank, LifeSouth Community Blood Centers, which had recently lost a $4 million judgment for an H.I.V.-tainted blood transfusion. “It’s just wrong for them to utilize people who are in the court system and essentially extort blood out of you because you owe traffic tickets, misdemeanors, felonies, whatever you’re there for,” Mr. Crocker said


I don't much care for the sense of entitlement that some judges seem to have in their courtrooms. Fortunately I haven't had reason to spend any time in courtrooms. I don't mind a judge who tries to bring some levity to the process or make individualized punishments fit the crime. And though it would irritate me greatly were I the defendant or convict I don't really mind judges who feel the need to provide a lecture to the person who's about to go away to prison. That's all inbounds I think. But coercing someone to give blood is in my opinion way out of line. That should not be allowed. No one should agree to that. Someone needs to tell Judge Wiggins just what he can do with his order to give blood. I would hazard a guess that most of the people who are appearing before Judge Wiggins are not the well off and politically connected. I thought these stories were examples of the current ways in which the wealthy and powerful continue to extort funds and literally blood from those who have less funds. Both are quiet obscenities in their own way.

What do you think of these stories?

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