C&D order against Higher One terminated, Fed announces

A cease-and-desist order against payments technology provider Higher One, Inc., from 2015 related to a student financial aid refund disbursement program has been terminated, the Federal Reserve Board said in a release Tuesday.

Higher One, Inc., of New Haven, Conn., served higher education institutions and was an institution-affiliated party of Customer Bank (Phoenixville, Pa.), a state member bank, and former institution-affiliated party of Cole Taylor Bank (Chicago, Ill.), a former state member bank.

A cease-and-desist order entered into Dec. 23, 2015, cited “deceptive acts or practices in or affecting commerce, within the meaning of section 5(a)(1) of the FTC Act (15 U.S.C. § 45(a)(1)), and unsafe or unsound banking practices” in connection with activities by Higher One and the banks related to financial aid reimbursement options offered to students. Higher One was assessed a civil money penalty of $2,231,250 upon execution of the order.

The order notes that from May 4, 2012, to Dec. 19, 2013, the Higher One website and associated materials used for selecting the disbursement method for schools’ financial aid refunds to students “contained material omissions about certain fees, features, and limitations of the OneAccount,” one of three options offered to students for receiving refunds, the use of which generated fees (including interchange) for Higher One. It said the banks also benefited “from holding and deploying the funds held in the non-interest bearing demand deposit accounts.”

Among numerous findings, the order stated there “was no information on the refund disbursement home page – the first webpage that would appear when a student started the disbursement selection process for the first time – about the ACH transfer to another bank account and paper check options, either of which may have enabled students to access their student financial aid refunds with fewer fees or no fees.”

Federal Reserve Board announces termination of enforcement action with Higher One, Inc.