Higher One will pay $11 million in restitution to students cheated by extra fees, the FDIC said today in a statement. The New Haven, Connecticut-based company is affiliated with Bancorp of Wilmington, Delaware, which agreed in the settlement to improve its compliance management. The banks, neither admitting nor denying wrongdoing in consent orders with the regulator, will pay a combined $282,000 in civil penalties, the FDIC said.
“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,” Mark Volchek, Higher One’s chief executive officer, said in a statement. He said his company, a payment-services firm focused on higher education, is fixing its practices as required in the settlement and has credited affected account holders.
The banks violated the Federal Trade Commission Act by charging holders of Higher One’s student debit cards -- issued by Bancorp -- with excessive insufficient-funds fees and letting accounts rack up fees by keeping them in overdrawn status, according to the settlement. The restitution payments from Higher One will go to about 60,000 students, the FDIC said.
Bancorp didn’t immediately respond to a request for comment left in a voicemail for its media contact.