|The LaSalle Street facade of the Federal Reserve Bank Building at 165 West Quincy Street in Chicago, Illinois. (Photo credit: Wikipedia)|
Release Date: July 1, 2014
For release at 9:30 a.m. EDTThe Federal Reserve Board on Tuesday issued a consent order to cease and desist and a civil money penalty assessment of $3,510,000 against Cole Taylor Bank of Chicago, Illinois. The order addresses the participation by the bank and its agent, Higher One, Inc. of New Haven, Connecticut (Higher One), in deceptive practices in violation of section 5 of the Federal Trade Commission Act.
Higher One is a nonbank entity that provides institutions of higher education with financial aid refund disbursement services for students. Higher One typically offers students three methods of receiving their financial aid refund: (1) paper check; (2) ACH transfer to an existing bank account; or (3) direct deposit to the Higher One deposit account and debit card product known as the "OneAccount." Because Higher One is not a bank, it must partner with banks to offer the OneAccount. From May 4, 2012 to August 14, 2013, Cole Taylor served as one of the banks providing deposit accounts in connection with the OneAccount.
The actions addressed in this order involve the following deceptive practices by Higher One, under Cole Taylor's oversight, that, at various points in the financial aid refund selection process, misled students about the OneAccount.
- The omission of material information about how students could get their financial aid refund without having to open a OneAccount;
- The omission of material information about the fees, features, and limitations of the OneAccount product, which may have made it more difficult for students to make fully informed decisions prior to selecting the method for financial aid refund disbursement;
- The omission of material information about the locations of ATMs where students could access their OneAccount without cost and the hours of availability of those ATMs; and
- The prominent display of the school logo, which may have erroneously implied that the school endorsed the OneAccount product.