RevTrak Class Action Lawsuit Claims Software Admin Fee Is An Unlawful Junk Fee

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A proposed class action lawsuit claims that a “software admin fee” tacked onto the very end of transactions in the RevTrak K-12 school payment platform is, in truth, an undisclosed credit/debit surcharge that, by law, must be clearly disclosed upfront.

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The 39-page RevTrak lawsuit contends that the company, which offers online payment technology to school districts nationwide, fails to properly inform parents and guardians of the software admin fee, as the surcharge is not disclosed upon initial setup, in any terms of use, or other pre-transaction materials. The software admin fee is disclosed only when a parent reaches the point in the checkout process where they have “no realistic ability to abandon the transaction without losing the underlying school service,” such as lunch, field trip registration and yearbook costs.

The class action lawsuit says that because credit and debit card surcharges are “heavily regulated and must be clearly disclosed upfront,” RevTrak’s practice of charging a software admin fee is unfair, deceptive, and in violation of the Minnesota Consumer Fraud Act and Illinois Consumer Fraud and Deceptive Business Practices Act.

The filing explains that school districts enter into merchant agreements with RevTrak, whose payment platform is integrated with various others, which do not process payments, to manage students and staff, district operations, payroll, human resources, finances and more.

Per the complaint, RevTrak, one of the largest K-12 payment processors in the country, has prevented proposed class members from making informed purchasing decisions by hiding the so-called software admin fee until the final stage of checkout. The case describes this alleged practice as a “drip-pricing scheme,” which the Federal Trade Commission (FTC) defines as the practice of obscuring the final price to be paid by the consumer until the point of purchase.

“Because the fee is revealed only after users have invested their time and entered their payment information, it operates as a ‘gotcha’ charge — highly coercive and not reasonably avoidable,” the complaint states.

Related Reading: Junk Fees, Hidden Fees, Drip Fees Lawsuits & Arbitrations

The lawsuit similarly takes issue with the characterization of the fee as an expense to cover the maintenance of RevTrak’s platform or software when, in reality, it is charged “primarily as a profit mechanism” and to cover added surcharges tied to processing payments from credit and debit cards.

The complaint says the cost for a merchant to accept and process payments from a credit or debit card is generally around 3.99 percent of the total purchase price. To counteract that, RevTrak supposedly issues its software admin fee either as a flat-rate fee or as a percentage of the total amount parents are paying in a transaction, the case relays.

Both formats are incredibly unfair to the purchaser, the filing argues, and are implemented to ensure that the cost of the surcharge is taken on by parents and to squeeze out additional profits for the company.

In the case of the percentage-based fee, the filing claims that RevTrak charges consumers an additional fee that “exceeds all percentage amounts permitted” to be charged by major credit companies, including Visa, Discover, American Express and Mastercard.

These credit companies require merchants to clearly communicate and display any additional charges to consumers prior to the point of purchase, and any processing rates they charge to offset the surcharges must be less than the maximum percentage permitted, the suit claims.

RevTrak “uniformly” fails to meet either requirement, according to the complaint, which cites one district where the company allegedly charges 4.15 percent on each transaction.

With a flat-rate fee, all transactions on RevTrak are subject to the same surcharge regardless of their final amount, such as the $2 fee in the plaintiff’s Illinois school district, the complaint shares. Per the suit, this added fee is not as significant for parents who can afford to add large sums of money to their child’s account at a time, but for those living paycheck-to-paycheck who can only afford smaller, more frequent payments, the fee is more punishing.

“In other words, Defendant makes most of its money off the backs of the poor parents, who can only afford to add small amounts each time, and therefore have to recharge their children's accounts often, paying the Software Admin Fee each time,” the suit illustrates.

Per the complaint, the online payment managing platform operates in over 1,300 school districts across the United States and is often the only option that parents and guardians have to make payments towards their children’s education.

“Parents therefore face a coercive choice: either pay the unauthorized and undisclosed Software Admin Fee every time they make a school payment online, or refuse to pay the fee and leave their child without lunch money, unable to participate in field trips, or unable to satisfy required school fees,” the case asserts.

The RevTrak class action lawsuit looks to represent all individuals in the United States with a RevTrak account and who have paid a software admin fee.

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