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Lawsuit alleges lunch payment service used in local schools defrauded parents

Students fill their lunch trays at an elementary school in Kingston, N.Y., in 2017. (Mary Esch/AP)

Families in D.C., Maryland and Virginia could be pulled into a class-action lawsuit that’s been filed against an online lunch payment service being accused of pocketing money parents believed was going to their children’s schools.

Heartland Payment Systems, which owns and operates MySchoolBucks, is the subject of the lawsuit filed in the spring by Florida resident Max Story. He says Heartland misled him into believing program fees associated with the service were going to his child’s school.

With the lawsuit, families are “seeking damages and remedies to get back the money they paid that they shouldn’t have had to based on the fraud,” said Jennifer Bennett, Story’s attorney. “It turns out that it was Heartland, itself, that was charging fees, and none of the money was going to schools.”

The Georgia-based company denied the allegations in its Terms of Service agreement, which was updated in July. An attorney for Heartland declined to comment.

D.C. Public Schools, as well as Prince George’s, Montgomery, Fairfax and several other counties in Maryland and Virginia, use MySchoolBucks. The service is optional in many schools, but families who opt in use it to pay for meals and before- and after-school programs.

The lawsuit revolves around a $2.49 program fee that took effect in 2017 and accompanies every MySchoolBucks transaction. The fee is lower in Montgomery County Public Schools, where users pay $1.95, according to the district’s website.

Heartland, in its Terms of Service agreement, told parents their schools may charge them a fee to use the service, according to the lawsuit filed in May.

Now, in its updated service agreement, the company says program fees are paid to Heartland and “the school or school district may remit the program fee” to it.

Nationwide, about 2 million people with children in 30,000 schools use MySchoolBucks and may be affected by this lawsuit, Bennett said.

While Heartland allegedly told users that school districts may require program fees, local school systems say they have never enforced such a rule.

Fairfax County Public Schools doesn’t keep transaction fees for any of the district’s approximately 56,000 active MySchoolBucks accounts, said Lucy Caldwell, a schools spokesperson.

A notice on the Montgomery County schools’ website says the district doesn’t receive income from providing MySchoolBucks. Gboyinde Onijala, a spokesperson for the district, said the message wasn’t posted in response to the lawsuit and has been on the page “for some time.”

In a letter Prince George’s County Public Schools sent to families when it introduced MySchoolBucks in 2014, officials didn’t say the district would collect money from families to use the service.

D.C. Public Schools does not collect transaction fees, either. Only 28 D.C. schools participate in the MySchoolBucks service.

Bennett said Heartland has made attempts to quash the lawsuit, including trying to deposit $40,000 into the bank account Story connected to his MySchoolBucks service. Story didn’t give Heartland permission to put the money into his account and rejected the payment, Bennett said.

“They took that information without his authorization and tried to put a bunch of money in his account and say, ‘Hey, this case has to go away now because we put all this money in your account,’ ” Bennett said. “We’ve seen this happen in a lot of cases, this effort by corporations to kill class actions.”

Heartland has also limited the number of people who can participate in the lawsuit by disqualifying current users, Bennett said.

In its updated Terms of Service, Heartland says users who accept the agreement and complete transactions through MySchoolBucks “will not be permitted to participate in the Story case as a class member.”

“I think it’s outrageous that a corporation would take money from parents that the parents thought was going to their children’s school and then, when someone figured out what was going on, try to prevent those parents from going to court to try to get their money back and stop the company from doing this to other families,” Bennett said.

A hearing for the case — which has been assigned in the District Court for the Middle District of Florida — has been set for Oct. 25.

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