VENTURA, Calif., June 4, 2012 /PRNewswire/ -- A California resident and college student who was deceptively assessed bank fees by Higher One has filed a class action lawsuit against the fast-growing financial services company. The class action lawsuit alleges that the plaintiff, and other Higher One accountholders nationwide, were deceived into using a Higher One account in order to access their college financial aid money, then subsequently charged unfair and improperly disclosed bank fees. The lawsuit alleges that these practices violate consumer protection laws and also violate the contracts Higher One imposes upon students.
"It is difficult enough for students to afford college these days without a company like Higher One taking a student's financial aid money to pad its own bottom line," said Hassan Zavareei, a partner at the Washington D.C. based law firm Tycko & Zavareei, which represents the plaintiff, Ventura College student Sherry McFall.
Higher One has arrangements with hundreds of colleges and universities around the country whereby a student's financial aid money is automatically deposited into a Higher One bank account -- without any authorization from a student. Even before matriculating, students are provided Higher One debit cards in the mail. Students are also bombarded with advertisements and emails encouraging them to use the Higher One cards to access their financial aid money "immediately" and "faster" than any other method.
The lawsuit alleges, among other things, that Higher One and its partner, Bancorp Bank, falsely represent to students that they are the preferred banking provider of their universities and use other deceptive marketing to encourage students to use Higher One. The lawsuit also alleges that Higher One unfairly and deceptively charges students bank fees which most other U.S. banks do not charge, and which were not properly disclosed either prior to or after Higher One opened accounts for the students. In addition, the lawsuit alleges that Higher One failed to provide a reasonable means for students to avoid the excessive fees. For example, Higher One requires students to use Higher One ATMs to access their financial aid money without a fee -- but does not provide an adequate number of ATM machines, or even make those machines available at all hours. The lawsuit was filed in Ventura County Superior Court.
A recent report by the U.S. Public Interest Research Group agrees with many of the allegations made in McFall's lawsuit. According to the report, "The Campus Debit Card Trap,"
- "Fees can be steep and frequent for students using the university-adopted cards, including a variety of per-swipe fees, inactivity fees, overdraft fees, ATM fees and fees to reload prepaid cards."
- "Potentially aggressive marketing tactics can make students captive customers."
- Access to student financial aid funds placed on debit cards can be subject to limited availability of "convenient" fee-free ATMs for student loan withdrawals despite U.S. Department of Education rules. Students end up paying fees to access their aid."
- "Some practices, such as outsourcing of student ID functions and pre-loading of disbursement cards, raise privacy issues."
"Because many of these fees are paid with student loan money, a student could be paying off these unfair and deceptive Higher One fees for the next 10 or 20 years, which is outrageous," said Zavareei.
Tycko & Zavareei, which has been active in bank fee litigation nationwide, is also investigating banking and financial services imposed upon students at other colleges. "We are continuing to investigate the practices of Higher One and other banks who offer college students bank accounts and disbursement services. Students need to be compensated for practices which are, in essence, stealing their precious financial aid money," said Zavareei.
A copy of the Higher One class action complaint is available upon request from Tycko & Zavareei. Additional information about the case can be found on Tycko & Zavareei's website.
SOURCE Tycko & Zavareei LLP