Leading Provider of Campus Debit Cards under Investigation
Higher One Holdings, the leading provider of campus debit cards in America, could be under investigation by the Federal Reserve Bank of Chicago.
According to the Huffington Post, this investigation accuses Higher One of using “unfair and deceptive practices” against its users.
This investigation follows a similar case in 2012, where the Federal Deposit Insurance Corporation accused the company of violating the consumer rights of college students. That case ended with an $11 million settlement.
In this investigation, the Fed is looking over the company’s marketing and disclosure efforts for its college debit cards. If the investigation discovers bad practices from the company, it may lead to monetary penalties, restitution and a change in Higher One’s practices. A spokesperson from Higher One indicated that this “could have a material adverse effect on our business, financial condition and results of operations.”
In regards to the investigation’s status, Shoba Lemoine from Higher One told the Huffington Post, “It’s too early to assess the outcome as the review is ongoing. But keep in mind Higher One has made dramatic consumer-friendly changes to our account offerings including improved consumer safeguards and fee structures (dropped more than half a dozen fees, for example). These changes have been recognized by the GAO and OIG reports on campus debit cards.”
This is not the first time these financial products have come under scrutiny by a federal agency. Last year, the CFPB launched an investigation on the financial products aimed at college students.