Higher One Involved in $15m Lawsuit

Elizabeth Doll/TheTorch

Higher One, the financial company that provides Wittenberg with its student debit cards, has recently been involved in a class action lawsuit. Earlier this month, the company announced that it had reached preliminary agreements to settle the lawsuit for $15 million.

The lawsuit was filed by undergraduate college students around the country. Mentioned in the plaintiffs court filings against Higher One were, “unfair and unconscionable practices of automatically creating bank accounts for college students, depositing students’ financial aid funds into Higher One accounts without students’ permission, deceptively discouraging students from opting out of such accounts, and assessing deceptive and unusual bank fees on student accounts.”

With legal fees included, the lawsuit is expected to cost Higher One well over $16 million upon settlement.

Higher One is the largest of only a few companies that specifically provides debit cards and banking services to college students around the country. It has dealings with over 500 colleges and universities.

Douglas Schantz, Wittenberg’s Manager of Student Accounts, believes that the allegations against Higher One are unwarranted. “Most of the fees are pretty standard banking fees,” he said in response to Higher One’s allegedly exorbitant fees, “there wasn’t anything too out of sorts that I saw.”

According to Schantz, Higher One has provided rather conclusive evidence that they are not involved in unfair banking practices. “If you look through the document from Higher One associated with the case, they basically refute all the claims and say they’re without merit,” he said.

So why then is Higher One agreeing to such a costly settlement? According to Shoba Lemoine, Higher One’s Communications Director, the company  just wants to prevent this lawsuit from being any longer or costly than it already is. “We’re asserting that the claims in the lawsuits don’t have merit,” said Lemoine, “but we’re engaging in a settlement in order to avoid a costly, drawn out and messy litigation.”

Furthermore, Schantz said he didn’t understand the plaintiff’s accusations that Higher One deceptively made it difficult for students to opt out of their Higher One accounts. “When you first activate your card, you get a choice. You can use your own existing bank account. It’s all about choice for the students,” he said. “If you wanted to change your refund preferences or your payroll, you can log onto your account and make the changes at any time.”

Higher One has been involved in similar allegations in the past. “Back in 2011, they worked out an arrangement with the FTIC related to their fees” said Schantz. “That’s went they did a deep dive on their fee schedule to make sure that they weren’t doing anything inappropriate.”

Since beginning its dealings with Wittenberg about 6 years ago, Higher One has saved the University a significant amount of money, according to Schantz. The decision to use Higher One’s services was a conjoined effort between Student Senate and Wittenberg’s Administration to eliminate the inefficiencies of the old system where students received their payroll by check.

“It’s been a good relationship, it’s been a solid relationship and I think it delivers a lot of conveniences to our students,” said Schantz.

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