What families can expect to be charged for phone calls

The federal courts have issued a second stay of the FCC's October 2015 order. Families should expect caps and bans on ancillary fees.

by Bernadette Rabuy, March 24, 2016

Yesterday, March 23, 2016, the federal courts issued a second stay of the Federal Communications Commission’s historic October 2015 order that would have expanded regulations of the prison and jail telephone industry to in-state calls and ancillary fees.

It’s a little complicated because on March 16, the FCC issued a public notice reminding the phone companies that the interim rate caps of $0.21/minute (debit/prepaid) and $0.25/minute (collect) should apply to in-state calls. Just as expected, the companies went running to the courts in response. The bad news is that, for now, the courts have sided with these billion-dollar interests that have been price gouging families for far too long. The good news is that families will benefit from the bans and caps on ancillary fees, which can double the cost of a call.

Barring new court developments, here is what families of incarcerated people can expect to be charged:

For prisons, in effect now:

Inter-state calls will continue to be capped at a maximum of $0.21-$0.25/minute for debit/prepaid or collect, respectively. These are the rate caps that went into effect in February 2014. For now, in-state calls are not subject to rate caps.

The abusive hidden fees that our report Please Deposit All of Your Money: Kickbacks, Rates, and Hidden Fees in the Jail Phone Industry found can easily double the price of a call are now capped at:

• Payment by phone or website: $3 (previously up to $10)
• Payment via live operator: $5.95 (previously up to $10)
• Paper bills: $2 (previously up to $3.49)
• Markups and hidden fees embedded within Western Union and MoneyGram payments: $0 (previously up to $6.95)
• Markups and hidden profits on mandatory taxes and regulatory fees: $0 (We’ve seen these markups and hidden profits on “mandatory” taxes be 25% of the cost of the call)
• All other ancillary fees: $0. (There are many of these charges. Some of the most egregious ones are $10 fees for refunds, $2.50/month for “network infrastructure” and a 4% charge for “validation”.)

For jails, starting June 20, 2016:

Inter-state calls will continue to be capped at a maximum of $0.21-$0.25/minute, depending on whether the call is debit or collect. These are the rate caps that went into effect in February 2014. For now, in-state calls are not subject to rate caps.

The caps on the abusive fees discussed above will go into effect for calls from jails on June 20th.

After the court’s partial stay on the FCC order is lifted

Assuming that the federal court eventually sides with the FCC and allows the October order to go fully into effect, families can expect to see the following results at a later date:

• The following rate caps will apply to in-state calls:
• In prisons, the cost of a call will drop to $0.11/minute.
• In jails, the cost of a debit/prepaid call will fall to $0.14/minute to $0.22/minute, depending on the size of the jail. (Traditional collect calls will initially be higher and then, over a two-year period, fall to the $0.14-$0.22/minute level.)
• For both prisons and jails, the companies will be prohibited from defying the FCC’s rate caps by steering families to abusive “single call” products like Text2Connect™ and PayNow™ that charge $9.99-$14.99 for a single call.

The court has not set a schedule for the case yet, so we do not know when the partial stay might be lifted.

International calling and advanced communication services

The FCC also sought comments on regulating international calling and advanced communications services like video visitation and email, so the FCC is likely considering regulations of those services as well. The comment period closed in January, and we do not know when the FCC will rule on those issues.

Update March 30, 2016: The FCC has clarified what rules are in effect.