Banks deserve to be protected… Banks are consumers: they consume our life-spendings when we don’t read the fine-print.
Stephen Colbert interviewing Barney Frank
The Colbert Report Mon – Thurs 11:30pm / 10:30c Consumer Protection Agency – Barney Frank
Russell Simmons was all over the press last week, doing damage control about his RushCard prepaid card and its plethora of fees. He was reacting to journalists highlighting that, while he was in front of cameras in Washington fighting against the Durbin amendment about debit card interchange fees, his company UniRush was busy gouging its cardholders with an unbelievable array of fees.
Simmons accused journalists of mis-reading the table of fees listed in the terms and conditions of the card on the RushCard website and of mixing up fees for the “pay as you go” card with the fees of the “pay monthly” program to make the card appear more expansive than it really is.
Well, he missed the irony that both plans are charging “as you go”, and that there is no option to pay upfront for all services, contrary to his allegation that his cardholders could opt to buy up the card, like car shoppers would just buy a car upfront and not have to may for a monthly lease or loan reimbursement.
He even asked for a correction to be published by those publications.
Anyone can check the fee table for themselves at http://www.rushcard.com/cardholder.aspx
Here is what Robert Schmidt and Patrick O’Connor of Bloomberg Business Week wrote in their article “How Russell Simmons Out-Lobbied Big Banks“:
Unmentioned are the fees Simmons’ company imposes for its cards, including:
- a $9.95 monthly charge (correct: pay monthly plan)
- a $3 activation fee (correct: pay monthly plan)
- $1 for every purchase if a PIN is used (correct: pay monthly plan)
- $1 for online bill paying (correct: pay monthly plan; the journalist was generous enough not to mention that just enrolling for bill payment is $2)
- $0.50 to check your balance at the ATM (correct: pay monthly plan)
So the list of fees reported by Business Week is 100% correct, and they have not attempted to mix fees from various plans to make the cards appear more expansive than they really are.
Simmons also acted as if he was being insulted by his product being called a “prepaid card”. Well, the very title of the product’s website is:
“RushCard | Prepaid card | Prepaid Debit Card | Prepaid Visa | Prepaid Credit Card”
So, dear Russell Simmons, you certainly have excellent intentions, but the folks at UniRush are doing a terrible job with one of the most expansive products in the marketplace. No amount of spinning efforts on your part will change the fact that your card is among the worst choices for the very people you claim to be helping.
Start by cleaning up shop in Cincinatti.
Here is my own contribution to the eagerly awaited Restoring American Financial Stability Act.
None of the current provisions in the bill seems to address the crucial problem of “Fat Fingers”. On Thursday May 6, Wall Street may have gotten pretty close to total collapse because some trader supposedly placed an order to sell billions of shares of Procter and Gamble instead of millions.
With 30% of Americans being now considered overweight, the dangerous proximity of the “B” and “M” keys on computer keyboards has been a ticking bomb for quite some time.
Go ahead, check your own keyboard right now: the letter “N” is the only line of defense protecting the financial world from certain failure.
Can we keep counting on this single-letter levee to avoid future disasters?
Worse! Extend your keyboard inspection to the vicinity of the letter B and be very afraid…
A fat finger still greasy from a lunch of hamburger and fries quickly swallowed at the trader’s desk to save time and keep those bonuses up, could result in Trillions, not to mention Gazillions, of shares or dollars being ordered to change hands.
It is not a question of if, but when Armageddon will strike.
Unless we take some serious and immediate action.
This is where my suggested Fat Finger Amendment comes in:
Keycaps shall immediately be re-arranged with the four letters M, B, T and G relegated to each of the far corners of all computer keyboards.
Steve Jobs, please order your software engineers to patch the virtual keyboard software of iPads and iPhones right away.
A relatively new site called GetDebit provides information about “non-credit” card products.
In the US, debit cards that are linked to a bank account, and prepaid cards that are not, get both categorized as “debit” products and have that word printed on the front of the card. So, GetDebit actually deals with both debit cards and prepaid cards. (In Europe, prepaid cards do not have the word “debit” printed on them, and have other differences like not being necessarily embossed).
GetDebit stands out in its editorial approach: they do write articles about specific products and services without seeking advertising dollars from the companies behind them. This is worth noting in a world where infomercials are almost impossible to distinguish from genuine articles.
Granted, their business model is indeed to advertise products and place the highest bidders at the top of the pages, but they also mention products and do in-depth analysis without asking for ad dollars.
Evidently, we are praising them because they wrote a piece about the API that our company, Plastyc, released last week. And we have never paid them any advertising dollars.
I am re-posting here my original Huffington Post entry.
People sacrifice their privacy for financial gain on a regular basis. This trade-off is the foundation of loyalty cards. Every day, I allow SafeWay to track my purchases, and from time to time I get 70 cents off of a box of Kleenex or something similar.
But exposing private information to the world for no apparent gain is stupid. This was made painfully clear today when social networking site Blippy exposed users credit card numbers in Google search results.
Blippy is a viral marketing engine that relies on exhibitionism. It lets people automatically broadcast their purchases, with the idea that their friends will buy the same things. I’m not sure why people want to expose themselves like this. You see, with Blippy, you’re not promised anything in return for all this free advertising and personal exposure.
Worse yet, people put themselves at risk of identity theft. Giving up some privacy and exposing your behavior to one merchant because you want a specific benefit is one thing. But exposing yourself to the entire world is stupid.
Exploiting stupidity has always been a source of business. In fact, Blippy just announced $11 million in funding from August Capital.
There’s so many great things happening because of the Internet. But because of the Internet, exploiting stupidity is more scalable.
