“Bullies Still Steal Lunch Money in American Schools”
CAMDEN, NJ – October 30, 2024
Parent plaintiffs filed a class action lawsuit against school lunch payment processing company PayPAMS, which does business under the names PAMS Lunch Room LLC and PCS Revenue Control Systems, Inc. The lawsuit alleges that PayPAMS has been engaging in unfair and deceptive practices by imposing unlawful and excessive “convenience” and “service” fees on families who pay for their children’s school lunches through PayPAMS’ system.
According to the lawsuit, these fees are “junk fees” that PayPAMS uses to rack up its own profits at the expense of public school children and their families across the country who are just trying to buy food. Junk fees disproportionately affect low-income families, often stripping away their lunch money so that PayPAMS can make a profit. A Consumer Financial Protection Bureau (“CFPB”) study from July 2024 highlights that these transaction fees divert up to $0.60 to payment processors for every $1 spent by low income families on school lunches.
In light of the CFPB’s findings, in September 2024, at least eight US Senators wrote demanding an end to the practice, but PayPams continues to charge the unlawful junk fees.
“American families’ school lunch dollars should go to paying for food—not to line PayPAMS’ pockets,” said Shana H. Khader, co-counsel for the plaintiffs and attorney from the law firm Tycko & Zavareei. “With our clients, we are taking a stand for families across the country and are committed to securing damages for affected families and injunctive relief to prevent further harm.”
The class action lawsuit aims to represent all individuals who have used PayPAMS and paid these fees over the past six years. Plaintiffs argue that PayPAMS’ practices violate the New Jersey Consumer Fraud Act and the New Jersey Truth-in-Consumer Contract Warranty and Notice Act, as well as constituting a breach of contract.
Consumer advocacy attorneys Shana H. Khader, Katherine Aizpuru, and Peter Silva of Tycko & Zavareei LLP; Wesley M. Griffith of Cutter Law P.C.; Janet R. Varnell and Chris Brochu of Varnell & Warwick; and Michael Quirk and Esther Berezofsky of Motley Rice LLC are representing the
plaintiffs.
According to the CFPB, the cumulative impact of junk fees charged to public school families to buy lunch is staggering, with an estimated $100 million in Junk Fees collected annually from families across the nation.
“The bottom line is that PayPAMS is a modern-day schoolyard bully, stealing kids’ lunch money, and PayPAMS needs to be stopped,” said Wesley M. Griffith, co-counsel and the Head of Consumer Class Action Litigation at Cutter Law.
The case is Gaynella Price v. PAMS Lunch Room LLC, d/b/a PayPAMS, No. 1:24-cv-10178 in the United States District Court for the District of New Jersey.
