WASHINGTON, Dec. 24 (UPI) — College financial services provider Higher One was ordered to pay millions in fines and restitution fees for misleading student loan recipients into paying improper fees and opening unneeded bank accounts.
The Federal Reserve ordered $24 million in repayments to some 570,000 students who opened Higher One accounts. At the same time, the Federal Deposit Insurance Company ordered Higher One and its banking partner WEX Bank to return $31 million to 900,000 customers.
Regulators said Higher One compelled students to pay extra fees by omitting crucial information about financial aid disbursement availability and suggesting schools endorsed its OneAccount debit cards.
“Deceptive marketing practices with respect to student loans will not be tolerated,” Federal Reserve Governor Lael Brainard said. “This action ensures that students who were misled into paying fees to access their financial aid funds will receive restitution for those fees.”
The company must also pay a $2.23 million civil fine to the Federal Reserve and a $2.23 million fine to the FDIC.
Higher One Chief Executive Marc Sheinbaum said “product and service changes have already been completed to comply with a significant portion of the issues raised, which mostly relate to practices ended in 2013. After joining Higher One in 2014, I charged our team to set new standards for transparency and compliance.”
Both agencies said the students were affected by the practices between 2012 and 2014 and would receive restitution.
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