The Predatory Middleman

School meal programs were designed as a national security measure. The National School Lunch Act of 1946 aimed to safeguard children’s health. But payment processor EZSchoolPay has allegedly corrupted that mission. According to a federal class action filed in the Northern District of New York, the company inserts itself as a mandatory toll collector. It charges parents junk fees that bear no relationship to actual processing costs. Meanwhile school districts already pay EZSchoolPay for the same services. The complaint calls it “double dipping” at the expense of working families.

Hidden Fees, Exploited Families

The Consumer Financial Protection Bureau (CFPB) released a bombshell report in July 2024. It found that payment processors like EZSchoolPay charge up to nine times their actual processing costs. For low-income families on free or reduced-price lunch programs, the impact is devastating. The CFPB calculated that for every dollar a low-income family spends on school lunch, up to 60 cents goes to payment processors. EZSchoolPay charges a flat $2.95 fee per transaction in the New Hartford Central School District. On an $8 deposit that equals a 36.9% surcharge. The actual processing cost is approximately 38 cents. That means EZSchoolPay pockets a 675% profit margin on that transaction.

Plaintiff Jennifer Dodge: Trapped by Auto-Replenish

Plaintiff Jennifer Dodge, a mother of three in New Hartford, New York, used EZSchoolPay’s “Recurring Payments” feature. The system automatically added funds when her children’s account balance dropped below a minimum. EZSchoolPay did not warn her that each auto-replenish would trigger the $2.95 fee. She only discovered the charges when she received an email receipt for $22.95 to add $20 to her children’s lunch accounts. The complaint alleges this violates Visa’s rules, which prohibit convenience fees on recurring transactions.

Deception by Design

EZSchoolPay’s website falsely tells parents that junk fees are “charged by your school or school district.” The company’s own Terms of Use admit the school district does not profit from these fees. EZSchoolPay also conceals fee-free payment options. Many districts limit cash or check payments to school hours only, forcing working parents to use the electronic system. The complaint states that EZSchoolPay even requires school districts to deny Freedom of Information requests that would reveal the true fee structure. This active concealment forms the basis of fraud and New York General Business Law §349 claims.

The Scale of the Harm

The complaint cites USDA guidance stating that children “shall not be charged any additional fees for supervision or other services provided in conjunction with the delivery of benefits.” While the USDA later allowed school districts to charge fees if a free option exists, EZSchoolPay is not a school district. It is a third party that keeps the fees as profit. The CFPB estimates nationwide junk fees on school meals total $100 million annually. This is money that could have bought nutritious food. Instead it flows to a Canadian parent company, Constellation Software Inc., and its subsidiary N. Harris Computer Corporation.

Eight U.S. Senators wrote to the USDA in September 2024 demanding action. They called the practice “unacceptable” and said payment processors “snatch dollars meant to pay for kids’ school lunches in order to pad their profits.” Despite this pressure, EZSchoolPay continues to charge the same fees today.

Corporate Structure Designed to Evade Accountability

Defendant Constellation Software Inc. is headquartered in Toronto, Canada. Its wholly owned subsidiary, N. Harris Computer Corporation, operates EZSchoolPay. The complaint notes that Constellation Software Inc. transacts business in New York but has failed to register with the New York State Department of State. This corporate layering may be intended to shield assets. Plaintiff Dodge seeks class certification for all New York citizens who paid junk fees to EZSchoolPay in the six years preceding the February 24, 2026 filing.

What the Lawsuit Demands

The class action seeks injunctive relief to prohibit per-transaction junk fees. It also demands disgorgement of all fees collected, actual and treble damages under N.Y. GBL §349, plus attorneys’ fees. The complaint argues that families had no meaningful choice. They could not shop around for lower fees because their school district signed an exclusivity agreement with EZSchoolPay. This captive audience model is at the heart of the alleged corporate misconduct.

The case is Dodge v. Constellation Software Inc. et al., Case No. 6:26-cv-00301 (N.D.N.Y.). It represents a growing pushback against neoliberal privatization of essential public services. When a child’s access to lunch depends on a payment processor’s profit margin, the system has failed.