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JPMorgan Chase To Repay Former Prisoners Forced To Use High-Fee Debit Cards

JPMorgan Chase has settled a class action lawsuit brought by people released from federal prison, who were charged high and unusual fees on a debit card they were forced to use.

According to the complaint [PDF] filed in federal court in September 2015, “A federal releasee who leaves a corrections facility with nothing more than the clothes on his back and a Chase U.S. Debit Card in his hand has no choice but to pay Chase’s fees to access his own money.” One class member recalled leaving prison with $120, but due to the fees imposed by Chase, they were “only able to use about $70 of it.”

Chase does not accept guilt under the settlement agreement [PDF] but will return fees collected from former federal prisoners as well as ATM surcharges from third party operators.

The bank is liable for up to $446,822 in payments. Those who still have active debit cards will get their payment as an automatic deposit unless they elect to receive a check. They may request that any remaining balance on their card be included in that check so they can cash out entirely. Individuals who do not have active cards will also be able to submit claims.

Chase’s exclusive contract to provide debit cards to former federal prisoners was a “deceptive, fraudulent, and illegal scheme” to exploit “one of the most vulnerable groups imaginable.” The contract was awarded by the Bureau of Prisons without a competitive bidding process as mandated by law.

“If inmates want to access their money,” the complaint states, “they must accept Chase U.S. Debit Card’s terms.”

“Federal releasees are at the greatest risk and in the greatest need of support upon their release, as they re-acclimate themselves to living in modern society,” the lawsuit states. It argues they are “among those individuals least able to afford the unusual and unfair fees thrust upon them by Chase simply to access their own money.”

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

Federal prisoners are provided with a trust fund upon their incarceration, into which they can put any money they have. Friends and family can make deposits as well.

If a prisoner obtains a job while behind bars, any money they make is placed into the account. When they are released, any money they had in their trust fund is placed on a non-reloadable Chase debit card.

Plaintiff Jesse Krimes, who was released from the Federal Correctional Institution at Fairton in New Jersey in September 2013, was given a Chase debit card containing the balance of his trust fund. It came with a one-page sheet explaining how to activate the card, as well as a “card fee schedule.” The words “NON-RELOADABLE” were stamped on the back.

Former prisoners like Krimes were charged 45 cents for balance inquiries and 10 dollars to withdraw money at a bank teller window. They were charged two dollars for using a non-network ATM.

Chase told cardholders the ATM fee would be waived once for each deposit they made, however, the cards were non-reloadable, rendering the fee-waiver moot.

If a releasee didn’t use their card, they incurred an “inactivity” fee of $1.50 each month. As the lawsuit notes, these fees bore no relation to any costs incurred by Chase.

It did not cost Chase anything when someone withdrew their money from a teller window, and there was no reason to charge someone for their “inactivity.”

When Krimes attempted to learn more about his card’s service charges, “Chase’s customer service personnel could not adequately explain the charge, and in fact gave him contradictory responses on different occasions.”

Releasees were unaware of many of the policies because Chase failed to adequately disclose non-negotiable terms and conditions to cardholders.

According to the lawsuit, Chase exploits a loophole in federal law that permits the bank to employ predatory practices against former prisoners that are prohibited for other consumers. It calls current regulations “ambiguous,” as to whether their protections extend to federal releasees.

Federal prisoners are not the only ones being forced to use debit cards upon release. One 2014 study found that 52% of thirty three state corrections agencies responded that they use debit cards for releasees, most of which also reported that the cards came with fees attached.

Local jails, where inmate turnover is high, and therefore present a major business opportunity, are also beginning to see an uptick in the use of debit cards.

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Brian Sonenstein

Brian Sonenstein

Publishing Editor at Shadowproof and columnist at Prison Protest.