Higher One Fined $31 Million for Deceptive Student Debit Card Marketing
In a longstanding case against college debit card provider Higher One and its partner WEX Bank, the FDIC and the Federal Reserve have ordered the companies to pay $31 million in fines and restitutions for deceptive marketing practices. The companies are accused of providing false or incomplete information in their card agreements, such as limited details about the card’s fees, or not informing students of other options for receiving their financial aid disbursements.
In 2012, Higher One Holdings was preparing to pay fines for unfair fees charged to college students between 2008 and 2011. At the time, the company was also accused of pressuring students into signing up for their campus debit cards because their information was at the top of campus letterheads for 520 educational institutions. That case ended in an $11 million settlement.
Higher One wasn’t out of the fire for very long. In 2014, the company underwent another investigation from the Federal Reserve Bank of Chicago. That review eventually resulted in the $31 million in fees and restitutions, which breaks down as follows:
• $24 million in restitution, distributed to 570,000 college students
• $2.23 million in civil penalties
• $2.23 million paid to the FDIC
• $1.75 million in fines (paid by WEX Bank)
• Other miscellaneous fees affecting a total of 900,000 consumers
After the accusations in 2012 and 2014, Higher One brought on a new CEO, Marc Sheinbaum, to restructure the company and its practices.
“After joining Higher One in 2014, I charged our team to set new standards for transparency and compliance,” Sheinbaum said. “Today, the account experience is significantly changed and an even better student experience will be unveiled in 2016.”