PORTLAND, Maine — The bank subsidiary of the South Portland payment processor WEX Inc. agreed to pay a $1.75 million fine and possibly pay a portion of $31 million that federal regulators said WEX Bank and another company improperly collected in student loan fees from an estimated 900,000 people.
The bank and service provider Higher One denied violating any law in settling Federal Deposit Insurance Corp. claims that it did not provide students adequate information about how they could collect what was left over from their student loans after paying tuition and other costs.
The FDIC claimed the company only provided information about how to get those disbursements through Higher One’s system called a OneAccount without telling the students about associated fees.
Reuters reported The Federal Reserve also ordered Higher One to pay $24 million in restitution to about 570,000 students and pay a penalty of $2.23 million in a separate case. Higher One agreed to pay a penalty for the same amount to the FDIC.
Higher One since has agreed to sell off its disbursement business, which includes OneAccount, to Customers Bank for $37 million in cash, according to Reuters.
The FDIC said in a statement that WEX Bank, as the bank handling the transactions for Higher One, had approved the materials provided to students receiving disbursements through Higher One.
WEX Bank, with more than $41 million in net operating income in the third quarter of this year, agreed to pay the $1.75 million fine and contribute toward the $31 million restitution fund if OneAccount does not fund it.
The FDIC said affected consumers don’t need to take any action and will be contacted by the companies with notices of how to collect restitution payments.