CFPB junk fee spotlight on school lunch payment platforms

Yesterday, the CFPB's junk fee spotlight shone on school lunch payment platforms that help school districts process children’s school lunch payments. With a captive customer base, these companies can have broad control over fees assessed for each transaction. These fees are widespread and often hit low-income families the hardest. Overall, parents and caregivers have no control over fee rates and lack opportunities to shop around for cheaper options.

The Bureau released a report highlighting average costs and potential risks for families using electronic payment platforms to add money to their children’s school lunch accounts. More generally, the report also reviews the market size and landscape of school lunch payment processing companies, and it builds upon initial observations referenced in the Fall 2023 edition of the CFPB's Supervisory Highlights.

While more than 20 unique companies offer these services to school districts nationwide, the vast majority of enrolled students are served by just three market leaders. These processors typically charge fees to add money to a student’s school lunch account, which collectively can cost families upwards of $100 million each year. Among the companies it studied, the CFPB observed that the payment processors charge transaction fees of $2.37, or 4.4%, of the total transaction, on average, each time money is added into a payment account.