CFPB report: junk fees in online payment of school meals

One of the insidious sides of junk fees is that these charges tacked on to everyday goods and services are often hidden and mandatory. This is evident in the Consumer Financial Protection Bureau’s latest report, Costs of Electronic Payments in K-12 Schools, which describes the hidden fees in online processing systems that facilitate payment for school services. According to the report, “(a)lthough federal policy specifies that schools must provide a fee-free option for school lunch payment, many payment processors charge a transaction fee each time a user electronically adds money to a student’s school cafeteria account.” These fees “significantly increase” total spending on school-related costs, disproportionately impacting lower-income families. The CFPB noted that it has the authority to supervise payment processors, and it will continue to monitor these markets.

Some of the report’s key findings: 

• School districts are increasingly using cashless operations.
• School lunch payment processors typically charge fees to add money to school lunch accounts, which can cost families upwards of $100 million each year.
• Over the course of a school year, families with children eligible for means-tested reduced price lunch programs may send $0.60 to payment processors for each $1 they spend on school lunch.
• Families making online payments every other week, can incur as much as $42 in transaction fees over the course of a school year.
• Consumers cannot choose their payment platform for school services.