Higher One Holdings Inc., a major provider of campus-based debit cards and other financial services, this week disclosed in a
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Higher One Holdings Inc., a major provider of campus-based debit cards and other financial services, this week disclosed in a corporate filing that it is facing penalties from the Federal Reserve that could trigger default on a loan.
The company said that the Board of Governors of the Federal Reserve System advised Higher One on May 9 of its “determination to seek an administrative order against us,” relating to alleged violations of the Federal Trade Commission Act. Higher One said the alleged violations concern its “activities with both a former and current bank partner” and its marketing practices on a debit account for financial-aid refunds.
A spokeswoman for Higher One said Tuesday that it was committed to working with the Fed to address its concerns. The company “has made significant changes to our business, including the elimination of more than half a dozen fees and additional refinements including more consumer safeguards and a facelift to the online experience to make choices clearer for students,” she said.
Higher One isn’t a bank but partners with banks to offer its accounts to students. The federal Education Department has been working on rules to govern the use of such cards.
The penalty would be the second time Higher One has been sanctioned by U.S. regulators. In August 2012, the company agreed to refund $11 million to 60,000 students to settle allegations of unfair practices by the Federal Deposit Insurance Corp.
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