A class action lawsuit has been filed against a New Jersey company for allegedly charging excessive transaction fees when processing children’s school lunch payments. The lawsuit claims that PAMS Lunch Room and PCS Revenue Control Systems, doing business as Pay PAMS, are in violation of New Jersey’s Consumer Fraud Act and the Truth-in-Consumer Contract Warranty and Notice Act.
The plaintiffs, represented by various law firms across different states, seek to represent all individuals who have used PayPAMS and paid the company’s fees over the past six years. The lawsuit alleges that payment processors like PayPAMS charge higher fees than necessary, taking advantage of parents who have no choice but to use electronic payment methods for school lunches.
According to the complaint, school districts contract with third-party payment processors like PayPAMS to reduce processing costs and increase administrative efficiency. However, these processors allegedly abuse their discretion by charging significantly more than the actual processing costs, resulting in excess profits for the company. The lawsuit claims that PayPAMS charges per-transaction fees that far exceed the actual cost of processing payments, leading to unfair charges for parents.
For example, the lawsuit highlights that PayPAMS charges parents $1.95 to $2.40 per transaction, regardless of the amount or type of transaction. The actual cost to a payment processor for a credit, debit, or prepaid card transaction is much lower than what PayPAMS charges parents. This alleged discrepancy in fees has led to accusations of “usurious profiteering” by payment processors like PayPAMS.
The lawsuit also mentions that several school districts using PayPAMS have even higher transaction fees, with some allowing the company to charge a 5.6% fee per transaction. This has raised concerns among lawmakers, with a group of U.S. senators calling on the Department of Agriculture to prohibit such fees by school lunch payment processors.
The senators, including Elizabeth Warren, Sherrod Brown, and Bernie Sanders, argue that these fees represent unfair practices by payment processors and must be stopped to protect families from excessive charges. The lawsuit aims to secure damages for affected families and injunctive relief to prevent further harm caused by what the plaintiffs claim are unfair and unjust fees imposed by PayPAMS and similar companies across the country.