Talk about learning a lesson the hard way.
William Campbell first learned of his university's new system for sending out financial aid refunds during the summer of 2011.
Campbell recalled that he received a "fancy little letter" from Western Washington University's financial aid office and a company called Higher One. The letter informed Campbell that Higher One would be handling the disbursements via a new debit card.
What happened next was disturbing, Campbell said in comments before a Consumer Financial Protection Bureau panel on Sept. 30.
"You are given this card that every student has to use, whether you want disbursement to a Higher One account or elsewhere," he said. "You go to the Higher One website, and you can choose a Higher One account. It takes three clicks," and the graphics are bright and shiny.
"If you don't choose Higher One, it's double the clicks, much more drab, and harder to find," Campbell added. "It is intended to be difficult."
More than 80 percent of Western Washington students signed up for a Higher One account, said Campbell, a student senator at the university. The No. 1 reason they gave was that they thought it was required. In addition, he said, high fees and inadequate customer service made the accounts a bad deal.
Last year, Higher One reached a settlement with the FDIC over what the agency called "alleged unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act."
Communications director Shoba Lemoine said Higher One has since eliminated 10 different fees on its accounts, only one of which was requested by the FDIC, and paid restitution to customers. The company has a 99 percent retention rate with the schools it serves, she said, adding, "we've always been very transparent and student-friendly."
Higher One is far from the only company in the business of bringing plastic to campuses, even in the wake of the Credit Card Accountability, Responsibility and Disclosure Act of 2009, which curbed improper marketing of credit cards to students.
Credit cards are less ubiquitous than before the CARD Act was passed: A survey by Sallie Mae and Ipsos found that just 30 percent of students now use credit cards, versus 42 percent in 2010.