By Alexandra Alper
WASHINGTON Aug 8 Two financial firms will pay
penalties to settle charges that they overcharged students for
debit card accounts, the Federal Deposit Insurance Corp said on
Higher One Holdings Inc, a payment processor of New
Haven, Connecticut, will pay $11 million in restitution and a
civil penalty of $110,000 over allegations of unfair and
deceptive practices in its handling of a student debit card
Bancorp Bank, as issuer of the OneAccount debit card, will
pay a $172,000 civil penalty. Bancorp Bank is a unit of Bancorp
Inc of Wilmington, Delaware.
Both firms chose to neither admit nor deny the charges, the
"We believe the relatively low civil money penalty imposed
reflects how seriously we take our commitment to our customers,
the degree of the issue, and our level of cooperation with the
FDIC," Higher One CEO Mark Volchek said in a statement. He also
said the firm had already voluntarily incorporated some of the
FDIC's suggested improvements into its policies.
Bancorp Bank was not immediately available for comment.
According to the FDIC, the firms allowed student accounts to
accrue extra fees by permitting them to remain overdrawn for
long periods of time. The banks also charged students multiple
insufficient fund fees for a single transaction, the FDIC said.
The FDIC's order imposes restrictions on the way Higher One
can charge fees for insufficient funds, by limiting the bank to
no more than three such fees on a single account in a single
day, for example. The FDIC also said the bank must not make
misleading or deceptive statements in its marketing materials.
The restitution money will benefit roughly 60,000 students,
the FDIC said.
Higher One, which went public in June 2010, was reported
last week to be looking for a buyer.