AG Racine Announces Area Childcare Program to Reform Business Practices After Mischarging Parents and Engaging in Unfair Debt Collection Practices

Childcare Program Charged Parents Fees for Services Prior to Rendering the Services and Used Auto Dis-Enrollment of Children From its Programs  

WASHINGTON, D.C. – Today, Attorney General Karl A. Racine announced that an area before-and-after-school childcare program will be required to overhaul its business practices after an investigation found the company misled and deceived parents about late fees, auto-enrollment payments, and other charges.  

“When choosing before or aftercare for your child, trust in that program is of utmost importance,” said AG Racine. “With this settlement, Champions is making needed changes to its business practices that will make their fee structure more transparent to ensure that its customers, including parents, know exactly what they are paying for.”  

Today’s settlement resolves an investigation by the Office of the Attorney General (OAG) into allegations the childcare program, KCE Champions LLC (“Champions”) – which operates at 21 schools in the District – for illegally and unfairly deceiving parents of children at the program. OAG specifically alleged Champions failed to adequately disclose late fees and charged those fees before the completion of services, dis-enrolled children if payments were not made for two weeks, excessively called parents including at work to collect overdue funds, and failed to get clear authorization for enrolling parents in automated payment withdrawals.  

The settlement requires Champions to make needed changes to its business practices to make sure parents get clear, transparent, and timely outreach about fees and services. For example, Champions will now charge late fees only after the program fully provides its services, clearly disclose late fees and other charges, avoid auto dis-enrolling children until the parents haven’t paid fees for four weeks, and avoid auto-enrolling parents in automated withdrawals without clear approval.

As part of the settlement, Champions will be required to: 

  • Wait to charge late fees until after services have been fully provided: Parents will not be charged a late fee for Champions services, until after Champions has provided those services in full. For example, if the last day of services in a two-week billing period is on the 15th of a month, Champions will not assess a late fee earlier than the 16th of that month.
  • Disclose the amount and timing of any late fees in a manner that is both clear and visible: The amount and assessment of any late fees must be disclosed in the Parent Handbook, the Enrollment Agreement with Parents, and the Parent Contract.
  • Allow for a grace period before auto dis-enrolling a child from its programs: Champions will not dis-enroll a child from its programs until the parent has failed to pay for at least four weeks of services, and Champions has sent a letter and email to the parent notifying the parent that funds may be available through the school PTA, the school scholarship fund, a school community partner, and the DC Office of the State Superintendent of Education, to assist the parent in paying any money owed. 
  • Limit the number of times they call a parent to collect overdue funds: When attempting to collect any outstanding payments, Champions will not call more than three times per week, and will not call parents at their places of employment more than once, unless the parent agrees to receive collection calls at work.
  • Receive express informed consent before enrolling parents in automated withdrawals from their bank accounts: Champions will not enroll a parent in ACH withdrawals from their bank accounts for payment of Champions fees without obtaining express informed consent from the parent and clearly and visibly disclosing both the base amount of the charges (for regular services, not including miscellaneous charges) and the dates of the withdrawals.  
  • Pay $250,000 to the District: Champions will pay the District a total of $250,000 for costs and expenses the District incurred investigating and litigating this matter. This payment is reduced if Champions abides by the other terms of the settlement and makes timely payments.  

A copy of the settlement agreement is available here.