The New Lunchroom Bully
A corporate conglomerate is stealing lunch money
Paying for a school lunch via an online account should be easy and convenient.
Ok, let’s back up. All school meals should be free for all kids every day.
But, in most places in the country, school meals carry a cost. Online payment systems make it easy to load money - so kids don’t have to carry cash and parents can track spending. It’s also easier for schools to mange.
Of course, this convenience comes at a cost.
One report suggests families spend as much as $100 million a year in transaction fees just to load money onto student accounts in K-12 schools.
“Transaction fees and other types of junk fees can take an economic toll on American families just trying to pay for basic school expenses, including school lunch for kids,” said CFPB Director Rohit Chopra.
Not surprisingly, the school fee business is essentially controlled by a few major players who profit handsomely while charging outrageous rates to families trying to pay for lunch or other school expenses.
Global Payments is the big bad guy in the room, charging among the highest transaction fees via its subsidiary myschoolbucks.com.
Families pay as much as $3.25 each time they load money onto a student account. This can amount to $40-$50 a year depending on the number of times an account is loaded. Families living paycheck-to-paycheck often load more often, unable to pay a large amount at once.
Those least able to pay extra fees end up paying the most. And, at an average of $42 a year in fees, the costs add up to as much as two weeks’ worth of school lunch.
“They designed a system to nickel and dime hundreds of thousands of people once every other week,” said Adam Rust, the director of financial services at the consumer advocacy group Consumer Federation of America, calling the fees “a hidden cost of just living.”
The fees being charged all go to Global Payments or other processors, not to the schools. And the fees far exceed the 1-2% typically charged for credit card transaction fees.
“[The fees] are way above industry standards,” said Varnell. “The amount they are charging to parents for school lunch is several times more than whatever they’d be charged in virtually any other part of the market.”
One solution: Free meals at school for every kid, every day.
Until that becomes reality, the USDA is working to help schools identify fee-free payment processing options.
Mortgage Lender Fined for Deceptive Practices
A nonbank mortgage lender - NewDay USA - has been fined $2.25 million for deceptive lending practices.
The company presented loan pricing information to potential customers that made NewDay’s refinance products appear cheaper than competitors. Once loans were executed, consumers discovered the true costs far exceeded advertised prices.
The CFPB levied the fine.
“NewDay USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans,” said CFPB Director Rohit Chopra. “NewDay USA’s misconduct has no place in the VA home loan program.”
Humanity really sucks. Anything for $$$
So eye opening.