Is it wrong to sell the American Dream?
The two protagonists: Boyce Watkins, left, and Russell Simmons.
That question is at the heart of a feud between RushCard founder Russell Simmons and Boyce Watkins, a professor of finance at Syracuse University. On April 15, Watkins publicly condemned Simmons on the radio show “The Takeaway” by claiming that Simmons is exploiting the black community with the RushCard.
On the radio show, Watkins, who also runs the activist Web site Your Black World, said Simmons isn’t the humanitarian he claims to be, and even loosely compared him to a pimp.
“[Simmons is] saying I’m giving everyone access to the American Dream, but I never really knew the American Dream consisted of having a piece of plastic that puts people further and further in debt,” Watkins said. “But even a pimp that helps — that quote unquote ‘helps’ — a young woman get off the street, he can say, ‘I helped you because you were homeless when I met you and now you’re not.'”
Watkins went on to criticize the fee structure of the prepaid Visa RushCard, which includes an activation fee of $19.95, a daily convenience fee of $1 (capped at $10 a month), $1.95 ATM cash withdrawal fee and more. He concluded that larger, more powerful institutions need to solve the problems that Simmons is claiming to fix for the underbanked communities, such as lack of access to a bank account. (Disclosure: CreditCards.com offers the RushCard).
“Well it’s sort of like saying if you got a cavity on the left side of your mouth, you should chew with your right,” Watkins said. “Instead, why not actually dig to the root of the issue and deal with the financial literacy problems that exist in the black community. And then at the very least, the Rush Card might still exist, but the fees would be lower and more acceptable.”
Two days after the radio show aired, the New York Times ran a piece about financial innovations aimed at helping the underbanked communities. They weren’t too nice about it, either. The article quoted Watkin’s pimp line and said that Simmons “has apparently been marketing RushCards primarily to low-income African-Americans.” They also used a quote from the show describing the cards as “no-credit-check, prepaid credit cards with $200 credit limits and $50 a year in fees.”
Simmons wasn’t pleased with the publicity and fired back three days later with a response published on the New York Times’ Web site.
“The RushCard is a prepaid card, NOT a credit card. It gives people the convenience of a credit card without the debt,” Simmons said. “I have watched with pride the way RushCard has changed the lives of hundreds of thousands of people giving them respect and dignity. It gives underserved communities the tools to get their money right.”
The hip-hop entrepreneur went on to defend his card by saying it’s a better alternative than check cashing businesses that the underbanked use because they can charge fees up to 10 percent. His card also offers its users to shop online and rent a car, which “separates them from part of the American Dream that other Americans are free to enjoy,” he said.
But Simmons dodged the critiques of the RushCard’s fee structure.
“I have read that we are somehow trying to take advantage of people by charging high fees,” he said. “It’s a very competitive space and even Wal-Mart, the largest retailer in the world, has followed us with their own prepaid card.”
So where’s the line? Is it alright to exploit people, if only a little, if you believe you’re helping them? Does Simmons need to stop his “philanthropistic,” American Dream efforts with the RushCard and start making larger efforts to help the underbanked? Or is he just like you and me, trying to hustle any way we can?
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