School Lunch Junk Fee Lawsuit
Hidden fees in school lunch payments impact millions of families each year and disproportionately harm low-income families eligible for free or reduced-price meals and leaving countless children hungry. Payment processors like PayPAMS take lunch money away from kids by charging “convenience” and “service” fees at the school lunch counter. What those junk fees really are, however, is a means for the payment processors to inflate their bottom lines at the expense of children.
On October 30, 2024, families fought back, with Cutter Law, Tycko & Zavareei, Varnell & Warwick, and Motley Rice filing a class action lawsuit against PayPAMS for its illegal junk fee practices, aiming to stop payment processors from taking advantage of children in this way.
- View a copy of the Complaint
- Read the associated press release
What Are Junk Fees in School Lunch Programs?
PayPAMS and other payment processor companies exploit families by charging unnecessary “convenience” and “service” fees at the school lunch counter, taking lunch money away from low-income children. These junk fees take an economic toll on American families who are trying to pay for basic school expenses. According to a recent study by the Consumer Financial Protection Bureau (“CFPB”), the total junk fees charged for school lunches add up to roughly $100 million per year. This money could have gone to buying students food, other family expenses, or other educational purposes.
The CFPB study further found that up to $0.60 for each $1 that children spend on school lunch actually goes to payment processing companies like PayPams.
Insight from Cutter Law
“Like the bullies of old, the payment processors take lunch money away from kids, and particularly low-income kids, by charging ‘convenience’ and ‘service’ fees at the school lunch counter. PayPAMS and other payment processors need to be held accountable, and our lawsuit seeks to do exactly that.”
– Wes Griffith, Head of Consumer Class Action Litigation at Cutter Law.
Impact of Hidden Lunch Fees on Low-Income Families
Payment processing companies imposing “junk fees” on school lunches is particularly hard on low-income families. Over 20 million at-need children receive free and reduced lunches in this country each day. Those meals allow disadvantaged children to focus on learning instead of hunger. According to the School Nutrition Association, nearly one in five children in America live in households without consistent access to adequate food. These children rely on school meals for sustenance and nutrition, but junk fees often prevent them from fully participating in free and reduced lunch programs.
By reducing families’ ability to afford school lunches, junk fees contribute to food insecurity. Hungry children have a harder time focusing, learning, and performing well academically, putting them at a significant disadvantage compared to their peers.
“Junk Fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in like many of you did. They add up to hundreds of dollars a month. They make it harder for you to pay your bills.”
– President Joe Biden in his 2023 State of the Union Address
Legal Action Against PayPAMS and School Lunch Payment Processors
PayPAMS’ junk fee practices are not only wrong–they are also illegal. The class action lawsuit against PayPAMS alleges that the payment processor is engaging in unfair, deceptive, and illegal practices by charging excessive junk fees for school lunch payments. The suit aims to stop PayPAMS and other similar payment processors from charging these exorbitant fees. If your family has been affected by excessive PayPAMS school lunch fees, contact the class action lawyers at Cutter Law today to see if you qualify to sue.
If you and your family have been affected by PayPAMS junk fees, you may be eligible to join the class action lawsuit and receive compensation.
How to Join the Class Action Lawsuit Against PayPAMS
Families affected by PayPAMS junk fees can see if they are eligible to join the class action lawsuit against PayPAMS by contacting us here. This lawsuit seeks to recover money for families affected by these fees and ensure fair practices in school payment systems moving forward. Participating in this lawsuit may help put an end to these unfair practices and protect future families by standing up against corporate exploitation in school systems.
Frequently Asked Questions
Below are answers to some of the most common questions parents and families have about PayPAMS and its school lunch fees.
What Is PayPAMS?
PayPAMS is one of the largest payment processors in the country, covering over 1,500 schools and over one million students.
Can Families Choose a Different Payment Processor?
In most cases, school districts contract with specific payment processors like PayPAMS, leaving families with no other option but to use the selected platform. This lack of competition allows companies to charge high fees without fear of losing customers.
Are the Fees Charged by PayPAMS Legal?
PayPAMS fees are not only unfair but also illegal. The USDA prohibits junk fees on free and reduced school meal programs, and PayPAMS violates consumer protection laws by charging fees disproportionate to the cost of processing the payments, effectively creating profit from school lunch payments.
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