CFPB report examines ‘junk fees’ added to school lunch payments

CFPB school lunch junk fees report overview: 

• Who: The Consumer Financial Protection Bureau released a report on transaction fees charged by payment processing companies working with school district’s for children’s school lunch programs. 
• Why: The report found the companies charge so-called “junk fees” which the CFPB says often hit low-income families the hardest. 
• Where: The CFPB school lunch payments report involved children’s school lunch programs nationwide. 

Payment processing companies working with school districts to process children’s school lunch payments charge so-called “junk fees” that often hit low-income families the hardest, according to a new Consumer Financial Protection Bureau report. 

The CFPB said the payment processing companies have “broad control” over fees assessed on each transaction and that parents and caregivers who pay the fees have no control over the fee rates and lack the opportunity to shop around for a better price. 

“Transaction fees and other types of junk fees can take an economic toll on American families just trying to pay for basic school expenses, including school lunch for kids,” CFPB Director Rohit Chopra said in a statement. 

The CFPB report revealed the majority of school’s are served by three companies — including MySchoolBucks, SchoolCafé and LINQ Connect — and that, of the companies studied, they charged transaction fees of either $2.37 or 4.4% of a total transaction, on average, each time funds were added into a payment account. 

School lunch junk fees can cost families upwards of $100M per year, report says

Transaction fees charged by the payment processing companies can cost families upwards of $100 million per year, according to the CFPB report, which found families payments can pay as much as $42 per year in fees over the course of a year. 

The CFPB school lunch payments report found that even for families with children who are eligible for means-tested reduced price lunch programs still may pay $0.60 to payment processors for each dollar spent on school lunch. 

The agency noted that, while school food authorities participating in the National School Lunch Program are required to offer fee-free avenues to pay for school lunch, the fee-free options are “not always well advertised or accessible.” 

“Despite this requirement, families may be paying more in fees than they would choose to if they had access to comparable alternative payment options with lower or no fees,” the agency said. 

The CFPB agreed to pay $6 million earlier this year to resolve claims the agency discriminated against its Black and Hispanic employees. 

Have you been charged a transaction fee for a school lunch payment? Let us know in the comments.

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