Full story because of the annoying paywalls
Last fall, Emily Krieger, a mother in Bozeman, Montana, began to wonder about the unending fees she was paying to provide her two children lunch money at their local public school.
A cafeteria lunch at Emily Dickinson Elementary School, where Krieger’s children attend, costs $2.25, plus $1 for a carton of milk. Yet last year, the cost of loading money onto students’ meal accounts — which are managed by a website called MySchoolBucks — increased to $3.25 per transaction. The fee had grown larger than the cost of an entire meal.
“It caught my attention,” Krieger told The Lever. On the MySchoolBucks website, the $3.25 charge was called a “program fee.” But that money, Krieger learned, wasn’t going toward her children’s school.
Instead, the fees were going to one of the largest payment processing companies in the world — one that has been fighting a years-long legal battle to protect the millions it makes upcharging parents on lunch money. Now, that operation is facing new scrutiny from the courts and federal regulators.
At the same time, efforts are ramping up to provide universal free school lunches, which Minnesota adopted last year under the governorship of Democratic vice presidential candidate Tim Walz. But the school-lunch tycoons — and their powerful legal and lobbying teams — won’t be relinquishing their lunch-money millions without a fight.
MySchoolBucks, a subsidiary of financial behemoth Global Payments, is the largest of three payment processors that dominate an increasingly lucrative K-12 payments market, mediating millions of dollars in payments from students and their parents for everything from school lunches to athletic events. As the company has increasingly cornered the market, it has drawn attention from consumer-rights lawyers and federal regulators — and is now at the center of a growing battle over school-lunch junk fees.
“They’re making billions off a very large service fee,” Krieger said — on the backs of her own family and families around the country, as students head back to school. “It’s like, yikes, is this the best or only option? Is this what most schools are using?”
The company and its competitors are raking in more than $100 million a year from fees on lunch money alone, according to a July report by the Consumer Financial Protection Bureau, a federal consumer watchdog. The fees are particularly burdensome on low-income families, who often can’t afford to load a large lump sum of money onto a student’s meal account and therefore pay more frequent flat transaction fees. Regulators found that vulnerable families may pay as much as $0.60 in fees for every $1 they spend on lunch.
“They designed a system to nickel and dime hundreds of thousands of people once every other week,” said Adam Rust, the director of financial services at the consumer advocacy group Consumer Federation of America, calling the fees “a hidden cost of just living.”
Yet while MySchoolBucks has signed more and more contracts each year, making it a central growth driver for Global Payments, challenges to its business practices are brewing. A consumer fraud lawsuit, which was brought in 2019 against the company, may soon be certified as a class-action suit, which could allow attorneys to pursue settlements on behalf of many more families, according to new court records reviewed by The Lever. The CFPB’s recent report on the market, which documented the companies’ disproportionate burden on poor families, could represent a prelude to further enforcement.
Any attempts at reform, however, will come up against a company with annual revenues of more than $9 billion, and which spends hundreds of thousands of dollars a year lobbying lawmakers in Washington.
“There is every incentive in the world for [Global Payments] to throw everything they’ve got at us, as long as they possibly can, until a court makes them pay back parents,” said Janet Varnell, one of the lead attorneys on the ongoing lawsuit against MySchoolBucks, and the president of Public Justice, a pro-worker and pro-consumer legal advocacy group.
“This is the first case of its kind,” she added. “No one has successfully sued a K-12 payment processor company for this type of fraud.”
Global Payments did not return a request for comment.
Where do I sign to petition these fucks? This is pitchfork and torch material right here.
I would start by petitioning my local school board to stop using them, and next go lobby my state reps for universal free school lunches.
Schools (and government entities in general) really need to invest on setting up their own apps and programs for things like this. So much public school money gets wasted on paying for access to buggy and poorly maintained systems.
I work in a public school and it’s so frustrating to know a company is making bank for offering a mediocre middle man app, it hurts the Schools budget, the students, and in this case the families of all those students.
