Higher One, Inc., gets $2.231 MM CMP from Board

The Federal Reserve Board on Wednesday assessed a civil money penalty and issued a consent order to cease and desist against Higher One, Inc. of New Haven, Connecticut (Higher One). The order addresses deceptive practices by Higher One that misled students who obtained financial aid disbursements from institutions of higher education through Higher One. The practices employed by Higher One were misleading under section 5 of the Federal Trade Commission Act (FTC Act) and included:

• The omission of material information about how students could get their financial aid disbursement without having to open a OneAccount with Higher One
• The omission of material information about the fees, features, and limitations of Higher One's OneAccount product prior to requiring students to make a selection regarding the method for financial aid disbursement
• The omission of material information about the locations of automated teller machine (ATMs) where students could access their financial aid disbursements without cost and the hours of availability of those ATMs
• The prominent display of the school logo, suggesting that the school endorsed the OneAccount product.

The consent Order requires Higher One to:

• Provide restitution of approximately $24 million in fees to approximately 570,000 students who opened accounts with Higher One while Higher One's website and marketing materials were deceptive
• Pay a civil money penalty of $2,231,250
• Adopt a consumer compliance risk-management program
• Refrain from any future violations of section 5 of the FTC Act

From May 2012 through August 2013, Higher One offered the OneAccount through Cole Taylor Bank. In June 2014, the Board took an enforcement action against Cole Taylor Bank, including a civil money penalty. An action is being pursued against Customers Bank, the state member bank that has held OneAccounts since August 2013. The current Board action was pursued in coordination with the FDIC, which also announced an enforcement action against Higher One (see our Penalty Page entry).