The CFPB’s enforcement order against prison profiteer JPay, explained

The company was fined $6 million for exploiting people leaving prison.

by Wanda Bertram, October 28, 2021

Last week, the Consumer Financial Protection Bureau fined JPay, a prison services provider, $6 million for exploiting people leaving prison. Below, we explain why the Bureau’s enforcement order against JPay — which builds on some arguments we made in 2015 — is a victory for criminal justice reform.

JPay is a private company widely known for selling video calls, emails and other technology to incarcerated people, but it has a less-well-known business providing pre-paid debit cards to incarcerated people upon release. This update concerns that last business.

We’ve previously discussed how a growing number of prisons force people leaving custody to receive money — such as wages earned inside, unused “trust account”¹ balances, or small reentry stipends — on pre-paid debit cards riddled with high fees. The companies issuing these “release cards,” including JPay, have imposed fees for checking one’s account balance at an ATM, making a purchase, closing an account, and simply having an account at all, eating up formerly incarcerated people’s meager account balances.

The CFPB’s enforcement order against JPay will protect many people from these unreasonable and unjust fees going forward. The order takes four important steps:

1. The order prevents JPay from charging any fees on release cards in the future, other than an “inactivity fee” that can only be triggered after someone does not use their account for 90 days. For JPay customers, the complex matrix of extraneous fees is now gone, hopefully forever (though the consent order does expire after five years).
2. The order affirms that the CFPB has the jurisdiction to regulate release cards under the Electronic Fund Transfer Act, basically staking a claim for the Bureau to oversee JPay and other release-card issuers and take enforcement action when necessary. (In 2016, when the CFPB was conducting a rulemaking concerning prepaid cards, the Prison Policy Initiative brought the growing use of release cards to the agency’s attention.)
3. The order clarifies that under the Electronic Fund Transfer Act, people being released from prison cannot be forced to receive “gate money” (stipends for reentry) on prepaid debit cards. Instead, people must be given multiple options for receiving gate money, such as a paper check or cash. The CFPB has previously noted that the same protection applies to wages earned in prison, but it’s not entirely clear how this works with accumulated wages that are paid out in a lump sum when someone leaves custody.
4. The order spells out in detail how some of JPay’s business practices are unfair or abusive under the Dodd-Frank Act. This part of the order may prove critical for lawyers and activists fighting for further consumer protections for incarcerated people: Dodd-Frank prohibits unfair, deceptive, or abusive practices, but these are broad terms that need refinement, and the CFPB’s order provides that kind of refinement so that advocates can hone their strategies.

Readers who want further reading on this topic, particularly journalists, might find the following resources helpful:

• Our 2015 report/comment letter Curbing the exploitation of people released from custody, which we submitted to the CFPB during a rulemaking period, explains the problems with release cards, names the biggest release card providers (including JPay), and argues that the CFPB has the authority to regulate these companies.
• Our blog post “A partial victory: release cards included in CFPB’s new regulations” sums up what the CFPB did — and didn’t do — to regulate release cards during its 2015-16 rulemaking.
• Our page of research on exploitative in-prison services, including telecom services, commissary, and prison banking may provide further ideas.
• The Consumer Financial Protection Bureau’s searchable database of consumer complaints may help journalists looking for leads as they report on this issue.
• Contractual terms for all prepaid debit cards (including release cards), available in a searchable database maintained by the CFPB.

Blood from a stone: How New York prisons force people to pay for their own incarceration

A study by members of the New York University Prison Education Program Research Collective gives important first-hand accounts of the damage done when prisons shift financial costs to incarcerated people.

by Tommaso Bardelli, Zach Gillespie and Thuy Linh Tu, October 27, 2021

Note: We are pleased to present research from members of the New York University Prison Education Program Research Collective, a collaboration between faculty and formerly incarcerated students. Their research, based on interviews with 51 men who have been released from the New York State prison system, provides unique, first-hand accounts of how prisons are shifting more financial costs onto people who are incarcerated.

How much does it cost to take care of basic needs in prison? Our research team at New York University’s Prison Education Program set out to find an answer to this question. We looked not just for a specific dollar amount, but also at intangible human costs.

Going to jail or prison increasingly comes with a hefty price tag for the person who is incarcerated. As states continue to cut public spending, individuals are often expected to pay money to meet their basic needs in confinement facilities. Today, for instance, most states spend less than $4 per day to feed one incarcerated person—with some states like Alabama, Kansas, and West Virginia spending less than $2 per person. Such budgets are not enough to provide healthy and nutritious meals, so most people have no choice but to purchase extra food from the commissary store and/or to rely on care packages sent from home. At the same time that public expenditures have decreased, prison wages have stagnated, and the prices of food, phone calls, and other consumer items have increased. This has resulted in a greater economic burden on those individuals and families who can manage to absorb the costs, and a “surplus” (or exacerbation) of harm and punishment for those who cannot.

Our research team recently conducted interviews with fifty-one formerly incarcerated men in New York, all of whom had been released from state prisons in the last five years. The interviews provide a personal perspective on the ideology of fiscal austerity that has become commonplace in correctional administration. The people we interviewed also shed light on a dynamic that may surprise some readers: despite the common assumption that prisons are homogenous spaces, economic hierarchies do, in fact, exist inside. Our interviewees alluded to the concept of being “jail rich”(i.e., having access to some level of financial resources), and also discussed the significant portion of the prison population that cannot afford to pay for essential goods. Our research finds that a person’s inability to absorb the cost of fiscal austerity makes them more vulnerable to the harmful effects of a prison sentence, with consequences that are likely to last well after they have left prison.

A basic prison budget

While it is difficult to determine exactly how much it costs to cover basic needs inside a New York State facility, most of our interviewees estimated that they needed at least $175 per month to get by (translating to a minimum budget of $2,100 per year). With that sum, they explained, people can purchase just enough commissary food to integrate the paltry meals served by the facility, while also having some left to spend on other essentials, such as clothes, personal care products, and a few phone calls to family each month.

Average annual budget

Food insecurity and health consequences

Hunger was the first thing most of our participants mentioned when talking about what it was like to be poor in prison. The food provided by the prison, everybody agreed, was insufficient, unhealthy, and sometimes inedible. To get by, people who had no external support invested the little money they earned from in-prison employment in a “survival kit” consisting of peanut butter, jelly, and a few ramen soups, which they would use to integrate—or at times replace—prison meals. These individuals were more likely to report health problems such as gastrointestinal diseases, foodborne illness, and drastic weight loss, as well as frequent headaches and chronic fatigue. Tim¹, who was incarcerated for seven and a half years with little family support, for instance, remembered feeling constantly hungry during his last incarceration, to the point that he was often too weak or too ill to even leave his cell:

“When I was hungry, man, I had to lay—I just got to go and lay down. Because yeah you get, I got headaches, you know? I got headaches, I got cranky, I got moody, you know? Yeah, you get real moody when you want something to eat, believe me.”

Steven, who spent thirteen years in New York State prisons, said lack of access to food caused him to miss out on the few educational and training opportunities in the prison:

“I could never accomplish much while I was in there, he explained, because my stomach was always hurting, I could never get my body physically right. I was just deteriorating, day after day.”

Isolation from friends and family

While all incarcerated people experience dramatic disruption of social and intimate relationships, those who are unable to have regular contact with their loved ones during their prison sentence suffer its effects more acutely. Although costs of in-prison phone calls have significantly declined over the past decade—thanks to political action by families and to rate caps introduced by the Federal Communication Commission (FCC) – people who live off their wages from prison labor still cannot afford regular contact with family. Some of our participants reported speaking to family only a few times and receiving less than one visit per year during their incarceration. For many, the two free postage stamps provided by the facility each month offered the only means of communication with loved ones outside. Such an extreme and prolonged social disconnection is likely to heighten feelings of isolation and loneliness, and to negatively affects both people’s well-being inside carceral facilities and their re-entry after prison, when they must rely on family members for emotional and material support.

Monthly expenses for phone calls

Psychological consequences of prison poverty

Not being able to shop at commissary, or to regularly call home, can also affect how people experience the emotional and psychological harms of incarceration. Cooking their own meals or wearing their own clothes helps to counter some of the daily degradations of prison life. Having to continually eat unappetizing food or wear worn-out uniforms makes it harder to maintain a sense of self. Even more so than their peers, our interviewees who were indigent reported feeling stripped of their dignity and humanity by the prison system. For Steven, for instance, not being able to shop at commissary meant not just being constantly hungry, but also being unable to cook something nice on special occasions:

“I would not celebrate Thanksgiving, nor any other holiday. I don’t even celebrate holidays. I don’t celebrate New Year’s. I don’t celebrate any of that stuff, not in prison. I did no celebrating in prison. Every day was a living hell.”

For those with no access to personal resources, the inability to mitigate against material deprivation negatively affected their psychological well-being.

Conclusion

The carceral system has become even more unjust: incarcerated individuals have no access to gainful employment, and yet are required to pay for their basic necessities. While this system affects all incarcerated people, those who do not have the resources to cover basic needs experience its effects more acutely. Without regular access to commissary and telecommunications, people are more vulnerable to the negative health and psychological harms associated with a prison sentence. As a consequence, individuals and their families often face an impossible choice: drain the household’s resources to support their loved ones inside or leave them exposed to the most brutal forms of deprivation. This modern-day “prisoner’s dilemma” harms the well-being of the most disadvantaged people in prison and amplifies the negative impacts of incarceration far past the prison gate by draining financial resources from already vulnerable families and communities.

The authors are members of the New York University Prison Education Program Research Collective, a collaboration between faculty and formerly incarcerated students at NYU conducting research on the true costs of incarceration on families and communities in New York State.

Data update: As the Delta variant ravages the country, correctional systems are dropping the ball (again)

While some prison systems and local jails have maintained historically low populations, others have returned to pre-pandemic levels, despite the ongoing dangers of COVID-19.

by Emily Widra, October 21, 2021

This article was updated on February 10, 2022 with more recent jail and prison population data. That version should be used instead of this one.

The COVID-19 pandemic is far from over, particularly inside prisons and jails. The death rate from COVID-19 in prisons is more than double that of the general U.S. population.¹ In state and federal prisons across the country, over 2,800 people have died of COVID-19 and almost 438,000 people in prison have been infected, and thousands of additional cases are linked to individual county jails. As the more contagious Delta variant ravages parts of the nation, public health officials continue to recommend prison population decreases as a primary method of risk reduction. Our data show that with just a few exceptions, state and local leaders are continuing to fail to reduce their prison and jail populations.

The federal Bureau of Prisons, state governments and departments of corrections, and local officials have a responsibility to protect the health and lives of those who are incarcerated. After 18 months of outbreak after outbreak in prisons and jails, it is clear correctional authorities must be held accountable for their failure to reduce their populations enough to prevent the illness and death of those who are incarcerated and in surrounding communities.

Prisons

Even in states where prison populations have dropped, there are still too many people behind bars to accommodate social distancing, effective isolation and quarantine, and increased health care requirements. For example, although California has reduced the state prison population by about 18% since the start of the pandemic, it has not been enough to prevent large COVID-19 outbreaks in the state’s prisons. In fact, as of October 6th, 2021, California’s prisons were still holding more people than they were designed for, at 112% of their design capacity (and up from 103% in January 2021). Considering the continued overcrowding in the California prison system, it’s not surprising that the state is responsible for seven out of the ten largest COVID-19 prison clusters.

Figure 1. Prison population data for 50 states prison systems as reported directly from the state Departments of Correction and the Marshall Project and federal data as published weekly by the federal Bureau of Prisons. For the available population data for these 50 states and the Bureau of Prisons, see Appendix A.

Many states’ prison populations are the lowest they’ve been in decades, but this is not because more people are being released from prisons. The limited data available from eleven states shows that the average number of monthly prison releases have actually decreased since 2019.

Figure 2. These eleven states published monthly release data for 2019, 2020, and the beginning of 2021. Although we cannot be certain that this analysis is representative of the other 39 state prison systems and the federal Bureau of Prisons, these data do show us a pattern of responses to the COVID-19 pandemic: fewer people have been released from these state prisons in response to COVID-19 in 2020 than in 2019, and, in 2021, prison releases are even lower than the two prior years.

Instead, data suggest most of the population drops we’ve seen over the past 18 months are due to reduced prison admissions, not increasing releases. In the ten states for which we have data, both admissions and releases have decreased in recent years, making clear that prisons are not using all available tools at their disposal to stop the spread of the virus in their facilities. Reducing the number of people admitted to correctional facilities is critical to reducing the number of people behind bars, but to quickly decarcerate, states should release far more people, too.

Figure 3. These ten states publish monthly release and admission data for 2018, 2019, 2020, and at least the first half of 2021. Although we cannot be certain that this analysis is representative of the other 40 state prison systems and the federal Bureau of Prisons, these data do show us a pattern of responses to the COVID-19 pandemic: reducing prison admissions, while releasing fewer people from prison.

Despite evidence that large-scale releases do not inherently endanger public safety, states have elected to release people from prison on a mostly case-by-case basis, which an October 2020 report from the National Academies described as “procedurally slow and not well suited to crisis situations.”

Thankfully, some states have recognized the inefficiency of case-by-case releases and the necessity of larger-scale releases. For example, in New Jersey, Governor Phil Murphy signed bill S2519 in October 2020, which allowed for the early release of people with less than a year left on their sentences. A few weeks after the bill was signed, more than 2,000 people were released from New Jersey state prisons on November 4th.² In February 2021, North Carolina Governor Roy Cooper announced plans to release 3,500 people in state custody (with 1,500 of those releases to take place within 90 days). The releases were the result of a NAACP lawsuit challenging prison conditions in North Carolina during COVID-19. The state said it would release people using discretionary sentence credits (similar to “good time credits”), home confinement, and post-release supervision. But these are the only two instances we are aware of where large-scale release efforts are actually taking place in state prison systems.

Jails

Jail populations, like prison populations, are lower now than they were pre-pandemic. Initially, many local officials — including sheriffs, prosecutors, and judges — responded quickly to COVID-19 and reduced their jail populations. In a national sample of 415 county jails of varying sizes, most (88%) decreased their populations from March to July of 2020, resulting in an average change of a 24% population decrease across all 415 jails. These population reductions came as the result of various policy changes, including police issuing citations in lieu of arrests, prosecutors declining to charge people for “low-level offenses,” courts reducing cash bail amounts, and jail administrators releasing people detained pretrial or those serving short sentences for “nonviolent” offenses.

But later in the pandemic, those trends reversed. Between July 2020 and January 2021, the populations of 69% of the jails in our sample increased, reversing course from the earlier months of the pandemic. As of October 2021, 29% of the jails in our sample have higher populations now than they did in March 2020.³ Overall, the average population change across these 415 jails since March 2020 has diminished to only a 7% decrease, suggesting that the early reforms instituted to mitigate COVID-19 have largely been abandoned. For example, by mid-April 2020, the Philadelphia city jail population reportedly dropped by more than 17% after city police suspended low-level arrests and judges released “certain nonviolent detainees” jailed for “low-level charges.” But just two weeks later — as the pandemic raged on — the Philadelphia police force announced that they would resume arrests for property crimes, effectively reversing the earlier reduction efforts. Similarly, on July 10th, 2020, the sheriff of Jefferson County (Birmingham), Alabama, announced that the jail would limit admissions to only “violent felons that cannot make bond.” That effort was quickly abandoned when the jail resumed normal admission operations just one week later. The increasing jail populations across the country suggest that after the first wave of responses to COVID-19, many local officials have allowed jail admissions to return to business as usual.

Figure 4. Despite the continued dangers of COVID-19 and the Delta variant across the country, the number of people held in our sample of 415 county jails across the country has not continued to decrease over the past year, following initial reductions in early 2020. In fact, the data show a trend of jail populations slowly increasing. This graph contains aggregated data collected and provided by NYU’s Public Safety Lab and updates a graph in our June 2021 analysis. It includes all jails where the Lab was able to report data on March 10th and for at least 75% of the days in our research period, which ended October 7th, 2021. (Data are not available for all facilities for all days.) This graph presents the data as 7-day rolling averages, which smooths out most of the variations caused by individual facilities not reporting population data on particular days. The temporary population drops during the last weeks of May, August, and November 2020 and February 2021 and August 2021 are the result of more facilities than usual not being included in the dataset for various reasons, rather than any known policy changes. To see county level data for all 415 jails included in this analysis, see Appendix B.

In New York City, the jail population sharply declined after the pandemic was declared. Importantly, NYC jails – particularly Rikers Island – were some of the first jails in the country to witness a COVID-19 outbreak. And yet, across different demographics, NYC jail populations have slowly leveled out, suggesting that the policies responsible for the necessary decarceration are no longer in practice. In addition to suffering the effects of COVID-19, Rikers Island is also facing an unprecedented crisis following a history of over-incarceration and, according to a federal monitor, “decades of mismanagement.” At a time when jail populations should be at an all time low, Rikers Island’s confined population has surpassed the pre-COVID-19 population.

Figure 5. Graph showing the daily count of the NYC jail population by 5 key metrics. By all metrics, the NYC jail population dropped quickly at the start of the pandemic, but then started to rise again. As of July 29, 2021 the total NYC jail population was higher than before the pandemic. Critically, the number of people detained pretrial has actually grown — from 4,284 on January 1, 2020 to 5,152 people on October 1, 2021 — likely because of the rollback of significant bail reform efforts last year. The population drops in September 2021 are encouraging but are likely the consequence of Governor Hochul signing the Less is More Act, releasing people on technical violations from jail, and would therefore represent a helpful policy change that will reduce the population. However, the steep slope of the decline in September 2021 is unlikely to continue at that rate on its own without additional policy changes. Even with these reforms, the October 1st NYC jail population was only 3% below its pre-pandemic levels.
(Dotted lines connect periods with missing data, so the start of each dotted line and their bends represent specific historical data points.)

Even before COVID-19, prisons and jails were a threat to public health and considered notoriously dangerous places during any sort of viral outbreak. And yet, correctional facilities continue to be the source of a large number of infections in the U.S. The COVID-19 death rate in prisons is almost three times higher than among the general U.S. population, even when adjusted for age and sex (as the prison population is disproportionately young and male). Since the early days of the pandemic, public health professionals, corrections officials, and criminal justice reform advocates have agreed that decarceration is necessary to protect incarcerated people and the community at large from COVID-19. Decarceration efforts must include releasing more people from prisons and jails. Despite this knowledge, state, federal, and local authorities have failed to release people from prisons and jails on a scale sufficient to protect incarcerated people’s lives – and by extension, the lives of everyone in the communities where incarcerated people eventually return, and where correctional staff live and work.

Appendix A: State and federal prison populations during COVID‑19

Prison populations for the federal Bureau of Prisons and all 50 state prison systems from January 2020 to October 2021. When available, we used point-in-time population counts from the last day of the month. If that data point was not available, we then used either the monthly average daily population (ADP) or the point-in-time population count for latest date available in each month.

Appendix B: County jail populations during COVID-19

This table shows the jail populations for 415 county jails where data was available where data was available for March 10th (the day the pandemic was declared) and for 75% of the days between March 10th, 2020 and October 7, 2021. (This table is a subset of the population data available for over 1,000 local jails from the NYU Public Safety Lab Jail Data Initiative.)