U.S. fines Mastercard, UniRush $13 million for prepaid card breakdowns

WASHINGTON (Reuters) - The U.S. government on Wednesday fined Mastercard Inc and UniRush $13 million for a failure with prepaid cards that in 2015 left tens of thousands of people unable to pay bills and access cash.

The Consumer Financial Protection Bureau (CFPB) ordered the companies to pay $10 million in restitution to customers, with payments of around $100 to $250 depending on the harm the cardholders had suffered. They will pay another $3 million in civil penalties and create a plan for preventing future failures.

UniRush hired Mastercard to process its payments. Changing over to Mastercard was only supposed to make the systems for UniRush’s Rushcards unavailable for a few hours, CFPB Director Richard Cordray said on a call with reporters. Instead problems emerged over the course of weeks, and users were unable to access direct deposits or benefit payments.

“Consumers could not use their own money to pay for basic living expenses and necessities. Many racked up late fees and other penalties,” he said, adding that “customer service efforts failed to address problems adequately.”

Altogether, UniRush delayed processing direct deposits for about 45,000 consumers and improperly returned other deposits, while also wrongly suspending 1,000 accounts for suspected fraud, according to the CFPB.

Mastercard said it is pleased to bring the matter to a close and it will enhance its prepaid card practices.

Privately held UniRush could not be reached for a comment. In May it agreed to pay around $20 million to settle a class action lawsuit brought by customers affected by the outage.

On Monday leading provider of prepaid cards Green Dot Corp announced it is acquiring UniRush.

Reporting by Lisa Lambert; Editing by Chizu Nomiyama and Lisa Shumaker