ChatGPT summary:
Three big companies are taking advantage of poor families when they pay for school lunches. They charge huge fees—up to 60 cents out of every dollar—when parents put money into their kids' lunch accounts. This means that a lot of the money meant for meals ends up being stolen by these companies, which is pretty disgusting, don't you think?
The Consumer Finance Protection Bureau (CFPB) found that these companies are making a lot of money by charging unfair fees, especially to families who can least afford it. Schools are moving towards cashless systems, and parents often can't pick different payment processors. Even though there are rules saying schools should let families pay with cash without extra fees, many schools ignore these rules. The CFPB could step in to fix this mess and help protect poor families, but it's uncertain whether they will continue to fight this under new political pressures.
——
Three companies control the market for school lunch payments. They take as much as 60 cents out of every dollar poor kids' parents put into the system to the tune of $100m/year. They're literally stealing poor kids' lunch money.
In its latest report, the Consumer Finance Protection Bureau describes this scam in eye-watering, blood-boiling detail:
The report samples 16.7m K-12 students in 25k schools. It finds that schools are racing to go cashless, with 87% contracting with payment processors to handle cafeteria transactions. Three processors dominate the sector: Myschoolbucks, Schoolcafé, and Linq Connect.
These aren't credit card processors (most students don't have credit cards). Instead, they let kids set up an account, like a prison commissary account, that their families load up with cash. And, as with prison commissary accounts, every time a loved one adds cash to the account, the processor takes a giant whack out of them with junk fees:
https://pluralistic.net/2024/02/14/minnesota-nice/#shitty-technology-adoption-curve
If you're the parent of a kid who is eligible for a reduced-price lunch (that is, if you are poor), then about 60% of the money you put into your kid's account is gobbled up by these payment processors in service charges.
It's expensive to be poor, and this is no exception. If your kid doesn't qualify for the lunch subsidy, you're only paying about 8% in service charges (which is still triple the rate charged by credit card companies for payment processing).
The disparity is down to how these charges are calculated. The payment processors charge a flat fee for every top-up, and poor families can't afford to minimize these fees by making a single payment at the start of the year or semester. Instead, they pay small sums every payday, meaning they pay the fee twice per month (or even more frequently).
Not only is the sector concentrated into three companies, neither school districts nor parents have any meaningful way to shop around. For school districts, payment processing is usually bundled in with other school services, like student data management and HR data handling. For parents, there's no way to choose a different payment processor - you have to go with the one the school district has chosen.
This is all illegal. The USDA - which provides and regulates - the reduced cost lunch program, bans schools from charging fees to receive its meals. Under USDA regs, schools must allow kids to pay cash, or to top up their accounts with cash at the school, without any fees. The USDA has repeatedly (2014, 2017) published these rules.
Despite this, many schools refuse to handle cash, citing safety and security, and even when schools do accept cash or checks, they often fail to advertise this fact.
The USDA also requires schools to publish the fees charged by processors, but most of the districts in the study violate this requirement. Where schools do publish fees, we see a per-transaction charge of up to $3.25 for an ACH transfer that costs $0.26-0.50, or 4.58% for a debit/credit-card transaction that costs 1.5%. On top of this, many payment processors charge a one-time fee to enroll a student in the program and "convenience fees" to transfer funds between siblings' accounts. They also set maximum fees that make it hard to avoid paying multiple charges through the year.
These are classic junk fees. As Matt Stoller puts it: "'Convenience fees' that aren't convenient and 'service fees' without any service." Another way in which these fit the definition of junk fees: they are calculated at the end of the transaction, and not advertised up front.
Like all junk fee companies, school payment processors make it extremely hard to cancel an automatic recurring payment, and have innumerable hurdles to getting a refund, which takes an age to arrive.
Now, there are many agencies that could have compiled this report (the USDA, for one), and it could just as easily have come from an academic or a journ*list. But it didn't - it came from the CFPB, and that matters, because the CFPB has the means, motive and opportunity to do something about this.
The CFPB has emerged as a powerhouse of a regulator, doing things that materially and profoundly benefit average Americans. During the lockdowns, they were the ones who took on scumbag landlords who violated the ban on evictions:
https://pluralistic.net/2021/04/20/euthanize-rentier-enablers/#cfpb
They went after "Earned Wage Access" programs where your boss colludes with payday lenders to trap you in debt at 300% APR:
https://pluralistic.net/2023/05/01/usury/#tech-exceptionalism
They are forcing the banks to let you move your account (along with all your payment history, stored payees, automatic payments, etc) with one click - and they're standing up a site that will analyze your account data and tell you which bank will give you the best deal:
https://pluralistic.net/2023/10/21/let-my-dollars-go/#personal-financial-data-rights
They're going after "buy now, pay later" companies that flout borrower protection rules, making a rogues' gallery of repeat corporate criminals, banning fine-print gotcha clauses, and they're doing it all in the wake of a 7-2 Supreme Court decision that affirmed their power to do so:
https://pluralistic.net/2024/06/10/getting-things-done/#deliverism
The CFPB can - and will - do something to protect America's poorest parents from having $100m of their kids' lunch money stolen by three giant fintech companies. But whether they'll continue to do so under a Kamala Harris administration is an open question. While Harris has repeatedlly talked up the ways that Biden's CFPB, the DOJ Antitrust Division, and FTC have gone after corporate abuses, some of her largest donors are demanding that her administration fire the heads of these agencies and crush their agenda:
https://prospect.org/power/2024-07-26-corporate-wishcasting-attack-lina-khan/
Tens of millions of dollars have been donated to Harris' campaign and PACs that support her by billionaires like Reid Hoffman, who says that FTC Chair Lina Khan is "waging war on American business":
https://prospect.org/power/2024-07-26-corporate-wishcasting-attack-lina-khan/
Some of the richest Democrat donors told the Financial Times that their donations were contingent on Harris firing Khan and that they'd been assured this would happen:
This would be a disaster - for America, and for Harris's election prospects - and one hopes that Harris and her advisors know it. Writing in his "How Things Work" newsletter today, Hamilton Nolan makes the case that labor unions should publicly declare that they support the FTC, the CFPB and the DOJ's antitrust efforts:
https://www.hamiltonnolan.com/p/unions-and-antitrust-are-peanut-butter
Don't want huge companies and their idiot billionaire bosses to run the world? Break them up, and unionize them. It's the best program we have.
Perhaps you've heard that antitrust is anti-worker. It's true that antitrust law has been used to attack labor organizing, but that has always been in spite of the letter of the law. Indeed, the legislative history of US antitrust law is Congress repeatedly passing law after law explaining that antitrust "aims at dollars, not men":
https://pluralistic.net/2023/04/14/aiming-at-dollars/#not-men
The Democrats need to be more than The Party of Not Trump. To succeed - as a party and as a force for a future for Americans - they have to be the party that defends us - workers, parents, kids and retirees alike - from corporate predation.
——
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https://creativecommons.org/licenses/by/4.0/
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These dumbasses are so convinced that corporations are evil that they're blind to the fact that there's only one difference between these schools' merchant agreements versus a corner store's: a public/government entity negotiated the contract.
Progressives and leftists think government should run everything -- but that the meanie corporations should stop negotiating contract terms as ridiculous as these government clients always accept.
Leftists don't understand: it's a fundamental problem that governments have little incentive to make their constituents' money and other resources go far.
See also: "Nooooo! Nestle is abusing people by bottling water purchased at the unsustainable price the government set in negotiations with them."
These people think government should set more prices when they can't competently set the ones they touch today.
!anticommunists
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The principal agent problem affects everything the government touches.
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"Principal agent problem" is cope speak for "why are Republicans fricking up our government."
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blue cities are run so efficiently
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Are the Republicans in the room with us right now?
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Libs donone size fits all for schools. Schools now full of undisciplined animals. Libs remove any way to punish said animals.
Have to remove cash so the kids dont sell drugs at school (they still.do.since they also cant search the kids).
Idiot libs are convinced by r-slurs they work with to give money away for useless sytems.
Scream at republicans that dont want to continue ever uncreasing budgets that produce negative reaults.
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redditors love blaming the rightwing for the lack of public transport but every time they try to build a train or anything it's like a 10x more expensive than they claim it would be and 10yrs late.
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If only there was some outlet to get governments to negotiate better contracts. Oh wait, there is, it's called writing articles about it encouraging people to contact their representatives to push for change. Like the OP. Funny, that.
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That's fine, but maybe the article should focus on who actually fricked up here (government procurement) and not throw them a pity fest for them being "bullied" by businesses?
I understand that governments have to buy things. I expect them to do so competently and to be blamed when they don't.
You seem to want accountability, but you're defending an article that assigns it to the wrong place -- which hardly sets citizens up to expect and demand quality governance.
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Both the company and the individuals in government are just following incentives. If the goal is to assign "blame" then both are equally good targets. Since you were complaining about "socialism" it's pretty clear why you want to focus on the government's half of the blame, but a communist could easily write an identical comment about how we "expect companies to be friendly and to be blamed when they aren't" or some shit. The reason to prefer "blaming" the company is because blame demands less accountability, not more. When you blame someone you recognize their agency, and hence the deliberacy of their failure. Blaming is a last resort when you realize there's nothing else you can do to correct behaviour, a futile throwing up of one's hands in the air. The perfect response to a company that has very successfully maximized profits at your expense.
In a democracy, the government is not only for the people, but composed of the people. The people not only vote for the representatives, not only can contact their representatives and ask for change, but in fact these acts of voicing of concern are the whole of the government. If the government has failed, one can "blame" the government, or one can recognize this failure as directly downstream of one's own failure to make use of the endless channels citizens have to control the actions of government. There was a consultation on this issue, there was a public meeting, where were you? You can call and ask for another meeting, a review of the issue, a second chance. Why haven't you? You may have been "unaware" before , but now you have been made aware. What are you going to do?
All blame fundamenally has to rest in the self, because we only have direct control over our own actions. Moving "blame" out to the farthest away target is a method of giving ourselves free will: instead of focusing on the reasons that we have underachieved thus far, we silently acknowledge our failure, and commit to not reoffending in the future. By leaving the government free of blame, we similarly leave it maleable. Do we blame the rock for being in our way? No, we simply bring out the drill and the hammers and the dynamite and blast it out of our way. Man has achieved such heights that anything is like clay under his fists. But this power is given not to the individual, but to the collective. The government is one exercise of this power. When left unchained, it is like a pitbull unleashed in a garden of so many toddlers. But when this chain is taken in one's fists, controlled, directed, it becomes the leviathan that may reshape the world.
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I've known more coherent downies.
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!chuds !nonchuds, this is worth a read. It's also a good sub thread!
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It is not reversible. Businesses operate to serve their shareholders. Government is supposed to operate in the public or constituent interest. One side failed miserably in their duties here, and it wasn't the businesses.
Also, commies are just projecting when they say capitalism fails to deliver on the kind of promises communists make. Capitalism doesn't promise to achieve communist goals but better. Capitalism promises to create wealth -- wealth that is the usable for goals that can include social services. The fact that capitalism has destroyed most global extreme poverty is a side-effect but not the goal of the system.
!anticommunists
The schools could just use Square and gift cards, but that's apparently too much to expect of government. No, they insist on weird requirements that exclude competitively priced options, and then the media sympathizes with their idiocity.
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It could also be the case that the "exorbitant" fees are competitively priced, thus aren't exorbitant. Lot of questing begging in the article.
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I considered the scenario that the requirements are driving the costs (without the vendors profiting much), but I suspect that the requirements are barely enough in this situation to disqualify things like Square.
The amounts mentioned in the article (~$100M/yr) aren't enough to create a competitive market for this service. If the government actually cared about minimizing the costs to these families, they would ruthlessly work to update any regulations that disqualify use of Square.
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Bullying your local politician relentlessly is literally in the national interest and a moral good
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Good job bobby, here's a star
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I won't buy bottled water, not for any moralistic reason, but because I refuse to pay for it.
The exception is camping or doing field research where there isn't a place to fill my status symbol Stanley mug.
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Bottled water is stupidly overpriced compared to tap. Good job (genuinely)!
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I'm just doing my duty as a capitalist in rejecting the price that the vendor has asked
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People often think I'm pro-corporate or something when I actually just Milton Friedman-pilled.
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I won't buy it because they took out the BPA and now I have to get my vitamin B someplace else
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Like sure it's fine to have a broader argument about the proper boundaries of the government and private sector but back in the real world kids at public schools need to eat and these reports have clearly identified a problem that we have the regulatory capacity to address.
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I have a way to regulate this. How about we regulate the incompetent procurement people out of their jobs?
No? They can only buy competently when we regulate sellers to stop asking for the best price they can get?
You just know that even this regulation will result in buyers paying the legal limit, not actually getting costs as low as possible for these families.
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This is a complete misrepresentation of Cory's point here. He is saying that the government should have better weight to throw around in these negotiations, not that they should control them outright.
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Better weight? I've set up at least a dozen merchant agreements in my life, and the stock terms are 10X better than what these officials signed.
And don't give me the response that they needed something that the stock terms can't provide. That situation is a choice -- a situation businesses work hard to avoid and governments don't.
The school district where I live decided they needed a custom payroll system because they're too r-slurred to understand that the only way to control cost is to not have bizarre requirements.
I never said OP argued for that. I said leftists want more government control of pricing.
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Pretty much, yeah. You keep hearing them complaining how the corpos have the government in their pocket, but they are also more than willing to integrate the corpos deeper into the government.
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