Tuesday, August 2, 2016

Certain Fees May Apply (like, all of them)

The Financial Firm Ripping Off Jail Inmates:

Numi Financial describes itself as a “leader in stored value card solutions for the criminal justice and corrections industry.” Its parent company, Stored Value Cards, based in Carlsbad, California, provides debit-card services to jails in 44 states through Numi Financial and Futura Card Services, issued by banks. The terms for the card used in Multnomah County lists 11 possible fees—the $5.95 monthly fee, a $2.95 fee for ATM withdrawals, $0.95 for a declined transaction, $1 to check the balance, and $9.95 to have the balance refunded by check. Some cards have as many as 19 fees, a maintenance fee as high as $15 a month, and higher fees for international transactions. As for the banks that issue prepaid cards like these, they spent, on average, only 10.3 cents per transaction in 2013, including processing and third-party fees, according to the Federal Reserve Bank.

Numi is one of many for-profit players in an increasingly privatized prison industry. State spending alone on corrections hit $52.4 billion in 2012. Hundreds of private-sector contractors now provide food, clothing, riot gear, phone service, computers, and health care, in addition to directly operating many correctional facilities. In addition, prisoners and their families pay for numerous services, including phone calls, a $1.2 billion-a-year business, according to The New York Times.

At least 10 companies now offer release cards or inmate banking services to correctional systems. JPMorgan Chase does not give a card to each and every prisoner, but according to the Center for Public Integrity, it has a “lock” on the Federal Bureau of Prisons population, which currently stands at just under 200,000. At the state level, CPI found that JPay, a company founded in 2002, dominates, generating “well over $50 million in revenue” in 2013. (It was acquired for $250 million in 2015 by Securus Technologies, a Dallas-based prison phone provider.) But when it comes to county jails, Numi has quietly become a big player.

Numi is now in more than 400 jails across the country, including large facilities that house up to 8,500 inmates, and the company issues more than 600,000 cards a year. That’s enough to make Numi one of the top 10 providers nationwide of prepaid cards of all kinds, according to Adam Rust, research director of the North Carolina–based Reinvestment Partners, which advocates against predatory lending practices. The Mercator Advisory Group estimates the entire US prepaid-card market was $594 billion in 2014. 
Basically, when anyone goes to jail, even if you're there for only a few hours, your money is confiscated and when you "check out"* you are given a debit card instead of your cash back. Even if you have only a few dollars, it is not returned to you in cash, but on these prepaid debit cards, which then sock you with activation fees, balance fees, etc. until you not only lose whatever money you came in with, but you are in debt to these people, who can then come after you the same way a credit card company would if you fail to pay your debts. It's an astonishing rip off...the rich literally stealing from the poor...and in most states it's perfectly legal.
Deloney claims the card is easier than a cash or check system for jailer and arrestee alike. For jails, the Numi card eliminates check fraud, reduces “manpower, processing, accounting,” and takes “potential graft out of the system.” For inmates, Deloney says, “We try to make it easy.” He says cardholders can “buy a cup of coffee or brand new shirt, and get all your cash back at no charge. There are plenty of ways to liquidate this thing without the account maintenance fee kicking in.”  
All of which is absurd. The "manpower" it takes to convert the cash to the prepaid debit cards far exceeds that of a clerk sitting there in Release, counting out your money and giving it back. And the "graft" isn't being taken out of the system...the graft is just occurring on another level of the system.

So why would jails and local jailers (sheriff's departments) contract with these companies, rather than simply have a clerk give the freed inmate back their money? Because they receive a kickback (graft) for every inmate the debit card companies rip off (er, I mean process). It's a get rich quick scheme that makes everyone involved (jailers, sheriff's, investors, these companies) millions and millions of dollars.

Everyone except, of course, the poor guy in jail who has just been legally shaken down and lost whatever money he came in with. And the claims of 1% non-usage rate on these cards has been shown to be false...more than a third are never activated, which means companies like Numi just pocket the inmate's money. In other areas of crime and law we call this "robbery."

The players involved in this shouldn't be all that surprising to you, dear reader. I've written about JPay and their less than ethical involvement in ripping off inmate's families via their phone service. I've also noted JP Morgan Chase's cozy, if not incestuous, relationship with the BOP, and why that relationship possibly explains the DOJ's refusal to indict, convict and imprison Chase executives for the Great Rip Off (er, Recession) of 2009.

I also understand the need for a prison-based firm to run inmates accounts (and why currency is and should be considered contraband). Families can wire money to an inmate's account, and the inmate can purchase things in the commissary via electronic debit. I have no problem with that fundamentally as a concept, or even those companies being paid something to administer those accounts.

But jails are completely different from prisons, and there is absolutely no justifiable reason an inmate's money can't be returned to them upon a release (cash, on the barrel-head) by the jail operator. Most of the 12 million people who go to jail annually in the U.S. are only there mere hours. And while long-term inmates could certainly become eligible for some kind of administered account, there is no valid or legitimate reason (beyond simple graft) for these debit cards to exist.

* Numi actually refers to being sprung from the joint as "checking out," as though the inmate is checking out of a hotel or something. "Mr. Smith, did you enjoy your stay with us at Cross-Bar Hilton? Here's your lovely Numi gift card."

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