Fee-Based Debit Cards for Ex-Inmates ‘Unlawful’: Lawsuit

By Katti Gray 

For inmates around the country, release from local jail or state prison comes with a comparatively small amount of money earned from jobs inside their correctional facility, plus any money they had when they were originally booked and funds that friends or kin sent them.

But instead of getting what’s due them in cash, inmates released from what observers say is a growing number of detention facilities now get their money returned on a plastic debit card that inmates cannot refuse.

Just how many released inmates receive the fee-based cards is unclear, but a California federal lawsuit aims to stop the practice, which some prisoner rights advocates liken to sanctioned theft.

The lawsuit, filed March 28 in the U.S. District Court for the Southern District of California, alleges that Gainesville, Ga.-based First Century Bank, which issues its debit cards through the Carlsbad, Calif.-based Numi Financial, and Stored Value Cards Inc., effectively imposed fees on inmates using their own money, without their prior consent.

Each card includes weekly service fees of up to $2.50, a $2.95 fee for each completed transaction, and a 95-cent charge for every declined transaction.

The suit names, as lead plaintiff, Anthony Oliver, of Savannah, Ga., who was released from Chatham County Jail in Georgia in December 2016 after three months in custody. According to the suit, he was given a Numi Financial debit card with access to the funds in his inmate trust account. But he allegedly wasn’t informed of the fees he might incur from using the card, or given paperwork detailing the terms associated with the account.

Oliver is asking for an unspecified amount of damages, plus “restitution of monies gained through the allegedly unlawful conduct, and injunctive relief barring Numi Financial from continuing the practice complained of here.”

The attorneys for the plaintiff, James Tabb of San Diego and Eugene Turin of Chicago, declined to comment on the case. But advocates are already trying to recruit inmates for a nationwide class-action effort.

Carrie Wilkinson, senior litigation paralegal at the Lake Worth, Fla.-based Human Rights Defense Center, and director of its Prison Phone Justice Campaign, is one of them. In an interview with The Crime Report, she said First Century is just one among several banks profiting from the debit cards, which purportedly minimize the amount of time that correctional institutions staffers devote to processing cash in and out of inmate hands.

“It’s being sold to jails as a way to reduce staff cost, cut down your bookkeeping or accounting because you don’t have to give people money when they get out of jail; you just give them one of your nifty debit cards,” Wilkinson said.

In a similar class-action suit last spring, the U.S. District Court for the Eastern District of Pennsylvania awarded $446,822 to inmates released from federal prisons between May 2012 and October 2016. The suit, against JPMorgan Chase, claimed that federal inmates were given debit cards by the Bureau of Prisons (BOP) to access their funds upon release without being informed of the fees they would have to pay.

JPMorgan’s contact with BOP was a scheme “to exploit one of the most vulnerable groups imaginable—releasees from federal corrections facilities,” according to the suit, which named former prisoner Jesse Krimes as the lead plaintiff.

“Every cent counts for federal releasees who are coming out of prison without an immediate means of income.”

The California lawsuit further raises the stakes for banks and credit card companies involved in the practice. Partly because jails and state prisons operate with widely varying rules and levels of transparency across the country, the precise number of facilities that issue the cards is unknown.

But of 33 state correctional systems responding to a 2014 Association of State Correctional Administrators survey, 17 said they issued the debit cards and started doing so as long as five years before the survey was conducted. Eleven of the responding correctional systems reported that the cards carried user fees.

Such fees are often not only an inconvenience, but a net loss, for those who’ve been incarcerated.

In the JPMorgan complaint, one unidentified federal prisoner was quoted as saying, “I left prison with $120. Because of the fees, I was only able to use about $70 of it.”

Prisoner advocates charge the fees amount to officially sanctioned theft.

“It’s widely understood that high-fee debit cards are an exploitative way to pay low-wage workers, and there is a fair amount of litigation about that,” said Peter Wagner, executive director of the Framingham, Mass.-based Prison Policy Initiative.

Several years ago, he added, a few journalists began asking whether inmates were similarly exploited by being forced to use those cards.

Wagner’s organization issued its own report in 2015, noting that the federal  Consumer Finance Protection Bureau was also investigating the practice, at the request of lawmakers led by U.S. Sen. Cory Booker (D-N.J.).

The debit card system has effectively been endorsed by the California State Sheriffs Association, which lists Numi Financial on its website as a corporate partner.

In a 2013 announcement of Numi’s partnership with California’s Central National Bank of Enid, bank president R.S. Baker Jr. claimed debit cards “improve efficiencies” for taxpayers, municipalities. He added that individuals “transitioning out of the facilities will reap savings in costs and in convenience.”

In the same announcement, Brad Golden, CEO of Numi, which also provides cards for those in work-release programs and for paying jurors their daily stipend for completing jury duty, declared, “Together, CNB and Numi will expand their portfolio of product offerings and continue to deliver cost saving financial solutions.”

But such remedies hardly benefit those who are leaving detention, said Wilkinson, of the Human Rights Defense Center.

“If you get released from a jail at 6 a.m. and, you’ve got a prepaid card in your hand, you can’t get on a bus with that,” she said.

“And once you activate the card, you’re done. They give you the terms and conditions … and that often includes an arbitration agreement.

“You’re just kind of stuck.”