How To Put Money On Jail Calls – Underfunding: How “release cards” in prisons and jails perpetuate the cycle of poverty We examined release card payment structures to see how the industry is growing and what state leaders can do to make it worse. To prevent methods.
About 5 million people are released from prison each year, and another half a million are released from prison. But just because they are physically arrested does not mean they are free from financial exploitation as a result of the experience.
How To Put Money On Jail Calls
When a person leaves a correctional facility, they often have money—paychecks behind the door, support from family members, or money the inmate has on hand—paid up front by paying on a debit card. As I’ll explain below, there are a number of ways to get cash from a debit card (six, to be exact), but they can be expensive, difficult, or both.
Phone Calls & Letters
We first featured these “get-out cards” in 2015, when they emerged as a new venture from companies that traditionally profited from making phone calls to incarcerated people and their families, or transferring prices or payments to others. Technology Services. Although release cards are new in 2015, they are now commonplace. Since then, the Consumer Financial Protection Bureau (CFPB) has cracked down on some of the industry’s worst practices and cracked down on the industry’s biggest players, but those companies continue to line their pockets at the expense of low-income refinancers. See the login process. The director of the CFPB recently noted that some credit card companies have made a habit of using “people’s hard-earned money” through violations that sometimes violate federal law.
To better understand how these companies unfairly squeeze money from consumers—and more importantly, what can be done to stop them—we analyzed the most recent charges credit card companies filed with the CFPB. data (summarized in App
) paint a picture of a complex obstacle course that allows formerly incarcerated people to be released in small numbers.
When someone gets a probation card after being released from jail or prison, there are six ways to use its value, but each option presents different challenges and often involves a fee.
Following The Money Of Mass Incarceration
The first way to get a refund from someone’s debit card is to use the right to “cancel” and charge back.
This may be convenient, but card issuing companies make it difficult (or nearly impossible) for recently issued individuals to exercise their right to cancel. Cardholders face four main barriers:
If someone gets a temporary maintenance fee card and doesn’t close their account during the grace period, the maintenance fee will be deducted from the card balance every week or month. About three-quarters of the cards issued, we found, charge an “account maintenance” fee.
After the credit period expires, the cardholder can request to close the account and request a refund via postal check. Seventeen Issue cards (all powered by Numi Financial) charge a hefty $9.95 fee for this service, meaning not everyone with a $10 balance can take advantage of this opportunity. Anyone with a balance of $50 can use this option, but pay 20% for a very simple transaction.
Inmate Friends And Families
Some cardholders can transfer their balance to a bank account. Two of the three dominant debit card brands (Access Corrections and Numi) appear to allow cardholders to transfer money to their bank account without fees.
However, companies don’t provide much information on how to do this, other than directing users to the host’s website. This may be useful for seniors with bank accounts, but most people released from long-term prison do not have bank accounts, effectively eliminating this option for them.
Cardholders can use their balance to make purchases in-store or online. This company only works when they accept MasterCard. Although most retailers do, some large companies (eg landlords) do not.
But even if the cardholder wants to use the card at a business that accepts MasterCard, there may be a new set of fees for using the card to make purchases. Some cards charge users for each purchase (seven cards charge such a fee, averaging 71¢ per transaction). These fees are difficult to justify because card companies offset the costs of processing transactions through interchange fees paid by merchants.
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Half of the cards we tested charge fees for declined transactions, with an average charge of 62¢. Justifying these fees is even more difficult because card issuers do not incur any costs when a purchase request is declined. These fees are nothing more than corporate enrichment at the expense of consumers who cannot absorb the costs.
Finally, remember that for periodic fee cards, each time a customer spends their balance, they will pay a weekly or monthly fee.
Some card companies offer a network of ATMs where customers can withdraw their money for free or relatively low fees. However, if a cardholder uses an ATM outside of this network, they will likely be hit by both the card issuer and the bank that operates the ATM. 29 issuing cards (60% of our data set) charge an ATM withdrawal fee—an average of $2.58 per transaction. Sometimes these fees apply only to out-of-network ATMs, but some cards charge fees for all ATM transactions.
Finally, twenty-four cards charge a fee for ATM transactions (average cost 62¢). To opt out of ATM withdrawals, the cardholder may want to check their existing balance, but doing so at an ATM is 50¢ to $1.50 on seventh-issue cards (77% coverage).
The Hidden Cost Of Incarceration
Overdrafts often seem like a no-brainer, but figuring out how to use this option can be almost impossible. For example, the cardholder agreement for Axiom Bank issuing cards (identified as entry-level credit cards) states that cardholders must withdraw funds at “MasterCard’s primary financial institution,” but neither Axiom nor Mastercard itself provide information on how to determine this. Which bank branches fall into this category? Similarly, Central Bank of Kansas City (partnered with Naomi Financial) also can’t tell customers where they can withdraw, but cardholder materials warn that banks that offer this service can charge their own fees.
Too often, correctional services use discharge cards without regard to the individual’s experience in custody. A short period of time in prison – a few days or hours – is always the best option, and the person’s money is returned only after release. But if someone spends a lot of time on security and builds up a “trust account” balance, a prepaid debit card can be a convenient way to give someone money, especially if the fees and cards are low. Free and easy to use to transfer balances or cash them out.
The main issue here is not the issuance of the cards themselves. Unfair fees and practices are common in the industry today.
Correctional facilities can take steps to remove the most common cards. For example, we identified one issue card in the CFPB database that stands out: a Comerica debit card used by the North Dakota Department of Corrections. This card has relatively low fees compared to other companies: a $2/month deactivation fee if not used for twelve consecutive months, and a $10 replacement fee for a lost card. Overnight mail (replacement card free with first class mail) and some ATM fees.
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It’s also the only card we’ve reviewed that doesn’t include a mandatory arbitration clause. How did such a small prison system get such a good deal? That’s because the North Dakota Department of Corrections has joined other state agencies that use prepaid debit cards (for payments like unemployment benefits) to form a class-action settlement with decent consumer protections. This is a practice that more states can and should adopt.
State laws may also provide for low-emission cards. We’ve drafted simple laws that prevent the worst practices in the industry.
Finally, the federal government has a role in making these cards work better for consumers. The CFPB is currently investigating “fees” charged in connection with consumer financial products. These fees serve no real purpose other than to push the bottom lines of the companies paying for them. We have submitted comments asking the CFPB to complete the action it began last year when it fined JPay. We also urged the agency to eliminate the worst practices in the issue card sector
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