Families transferring funds to relatives in state prisons have no choice but to pay fees that can take more than a third of their money away, an expense that persists even though the cost of sending money drops everywhere else.
The average fee to transfer $ 20 to someone incarcerated in a nationwide state-run prison is 19% ($ 3.80), but ranges from 5% ($ 1) in some states to 37% ($ 7.40) in others, according to a recent prison policy. Initiative study. Almost all the money goes to the three private companies that monopolize the market.
“There really hasn’t been any organized backtracking to this,” said Juliene James, vice president of criminal justice at Arnold Ventures, a philanthropic investment fund.
“Maybe there were costs historically,” she says, “but we live in the Venmo era.”
The three companies working in state prisons – JPay, Global * Tel Link and Access Corrections – defend the fees necessary to ensure increased security, data collection and other requirements set by prison authorities, which they say , significantly increase money transfer costs.
Services like Venmo, which operate outside of the prison context, lack the necessary security and other features offered by companies serving prison populations, Securus Technologies, a unit of private equity firm Platinum Equity Partners , which operates the JPay payment platform, said in a statement.
“Facilities contractually require security protocols for data storage, they also have the ability to withhold or reject funds based on security concerns,” the company said.
But the companies — two of which are owned by the same private equity firms that dominate the state prison phone market, and the third that operate prison commissioners — don’t do much more than the same security checks as other transmitters. money are making at a fraction of the cost, said Bianca Tylek, executive director of Worth Rises, an advocacy group that focuses on privatizing the criminal justice system.
There is no reason why the services offered by the JPay, Glogal * Tel Link and Access fixes cost much more than those offered in the private sector, she said.
“They know that the people who use their service don’t get more,” Tylek said. “So they have the highest fees at the lowest amount. ”
Sending money privately using the popular money transfer apps Venmo and PayPal is free of linked bank accounts or balances, and costs around 3% by credit card.
The Consumer Financial Protection Bureau and New York Attorney General Letitia James recently expressed interest in the issue of prison money transfer fees.
Yet the high cost of transferring money to prisons did not generate the scrutiny associated with the costly prison phone calls, which drew special attention from the Biden administration, with the Federal Communications Commission taking action to lower the costs. Several states have also taken action on these rates in recent years.
Securus’ JPay unit and Global * Tel Link (GTL) are two of the largest players in the state-level prison telecommunications and money transfer market.
“The appeal of the bundled contract is very strong” for state prison offices, said Stephen Raher, general counsel for the Prison Policy Initiative and author of the report, released in November.
The third major player in the market is Access Corrections, which is part of the Keefe group companies that operate commissaries and other prison services. Keefe is owned by private equity firm HIG Capital.
JPay said in a statement that the average payment made through its online services across the country is $ 50 and carries a charge of 14%, which it says is lower than Western Union and comparable to the rates offered by MoneyGram and Walmart payment services.
While the Prison Policy Initiative report focused on transfers of $ 20 and $ 50, different states have different minimum amounts that can be transferred, JPay said.
Global * Tel Link and Access Corrections did not respond to a request for comment.
Money sent by family and friends to inmates is needed to pay for instant noodles and other snacks to supplement poor nutrition, dental care, basic medical expenses, and toiletries ranging from shampoo to toothpaste, according to activists.
Blacks made up the largest segment of the prison population with nearly 390,000, followed by whites and Hispanics, according to the Bureau of Justice Statistics. He said 938 out of 100,000 black Americans were in prison in 2020, by far the highest proportion of the American population.
The poverty rate for black Americans was 19.5% in 2020 and for Hispanics at 17%, according to the US Census Bureau.
A 2020 report from the American Action Forum, a conservative think tank, found that overall, 57% of men and 72% of women arrested were living in poverty.
The costs of transferring money to prison fall hardest on those who can least afford it, said Miriam Krinsky, executive director of Fair and Just Prosecutions, an advocacy group. “It’s sort of a high-profit industry that makes money off the backs of the incarcerated,” she said.
The amount that a family or friends end up paying to send money to their loved ones depends on where they live and the terms of the contract that state prison authorities sign with service providers.
Arizona offers families and friends of inmates three different options, including JPay and GTL, to wire money into jails with 5% overhead on transfers of $ 20, the lowest found by the Prison Policy Initiative.
Other states, like Arkansas and Maine, provide their own state-run money transfer services, with Arkansas charging 10% on a $ 20 transfer and Maine a 12% fee. Arkansas also allows JPay to run a concurrent service, and the company charges 9%.
Representatives from the Arkansas Department of Corrections did not respond to a request for comment.
California, the state with the largest incarcerated population, allows the three major prison money transfer operators to provide services to its prisons. JPay charges 10% on a $ 20 transfer, Access Corrections 18%, and GTL 20%, according to the Prison Policy Initiative.
The California Department of Corrections & Rehabilitation “is committed to providing effective options for friends and family who transfer funds to loved ones in prison,” the agency said in a statement.
California launches an RFQ every two or three years, and a new request is expected to be launched in 2022, the CDCR said.
“To be considered for the contract, the company must have a history of working with a large incarcerated population, and the service must be free for the CDCR,” the agency said.
Kansas, Nevada, and Utah have rates up to 35% per $ 20 transfer. Officials in those states did not respond to requests for comment.
The Federal Bureau of Prisons offers money transfer services through MoneyGram International and Western Union, while each private prison that the federal government contracts with has its own contracts.
Money transfer fees in state prisons affect a much larger population than fees in federal prisons, with state prisons holding nearly 1.1 million in 2020 and the federal prison population rising to just over 175,000 that year, according to Bureau of Justice Statistics prisoners in the 2020 report.
The agency also found that prison populations declined dramatically across the country thanks to a combination of humanitarian release programs and other factors in 2020.
States also have cheaper, if not free, options for sending money to incarcerated people, but they often have issues that make them less attractive than simply transferring money.
Most states provide “safe boxes,” often operated by the same companies that handle online money transfers. Families can deposit checks or money orders in the mail or in PO boxes and have them delivered to loved ones. Both options come with their own costs.
The safe option can be done either in person, which would involve a trip to visit an incarcerated loved one, or by mail.
State and federal prisons are often located hours away from large population centers, making visiting difficult and expensive for people, and sending money through the mail presents its own problems. JPay says it processes mailed checks and money orders within 10 days, but other services may take longer.
“It can take three or four weeks for the money you send by check or money order to get to people,” Tylek said.
Some government agencies have taken notice of the prison financial services market.
In October, the CFPB ordered JPay to return $ 4 million to those formerly incarcerated and to pay a fine of $ 2 million for charging improper fees on debit cards issued to people upon release from prison. The cards contained money that either remained in their commissary or other accounts or earned through prison labor.
Tylek and other criminal justice reform activists say they have been in contact with the CFPB over money transfer fee issues, though the office has declined to confirm whether he has encountered them.
“More broadly, any suggestion that a consumer is being exploited is troubling,” the CFPB said in a statement to Bloomberg Law.
Raher added that he had been in contact with the New York attorney general’s office, which did not respond to a request for comment.
The Federal Trade Commission also has the power to investigate money transfer fees for prisons. State legislatures could also move to cap on transfer fees, as many have done with telephone call charges.
Much of the money that families and friends send into prison systems is used to enable people in prison to buy basic necessities, Arnold Venture’s James said.
Many states charge inmates for room and board as well as emails, texts and other communications with the outside world, with much of the money going to private companies, she said.
“There is hardly any aspect of prison life that is not affected by privatization,” said James.
Ebony Underwood, founder and CEO of We Got Us Now, a national advocacy group for children of incarcerated parents, said that during her father’s 30 years in federal prison, her family sent her money for everything from ramen noodles to shampoo to toothpaste. , and deodorant, to clean underwear and socks.
While federal prison rates may be lower than state prisons, the transfer fee still represents “the commodification of our love,” Underwood said. “At the end of the day, we are punished just for keeping in touch with our parents.”