Home » commentary » FCC Attempts to Set Caps on Prison Industry Price Gouging

FCC Attempts to Set Caps on Prison Industry Price Gouging

[Ed. note – Ever since prisons began to be privatized in America, a variety of capitalist vultures have been swooping in to exploit the system. This was to be expected when you place the warehousing of human beings under the domain of for-profit corporations. The author of the article below is a former prisoner. ]

By Chandra Bozelko | New York Times Op-Ed page

ORANGE, Conn. — LAST week, an order from the Federal Communications Commission that caps rates for United States prison telephone calls went into effect. A late stay by a federal appeals court, sought by phone companies suing the F.C.C., had threatened to delay the order’s implementation. The stay affects several portions of the F.C.C.’s regulation, but key rate caps and restrictions on charges now apply — to the delight of advocates for prisoners and their families who have long criticized the call rates as a form of price gouging.

But the celebrations are premature. Companies that cater to correctional populations target people who have a desperate need and no other options. Capping phone rates will provide little check on a $1.2 billion industry.

Despite the rate-capping order, the phone companies’ litigation against the F.C.C.’s efforts to rein in their excessive charges is likely to continue. But even as they fight in court, the companies are dodging oversight by exploiting a system that is largely unregulated: prison financial services.

Unless they’ve known someone who’s been incarcerated, most people don’t know that the corrections system has an entire commerce arm of its own. Everything an inmate can buy — phone calls, commissary, copays for substandard medical care, video visitation or the new email service — is purchased through a special account created by the prison or a private company.

Merely to add funds to an account, the family or friends of inmates must pay a service fee. I have an account myself with the prison phone giant Securus so that inmates I want to keep in touch with can call me. In February, I’d loaded my phone account without any fee. Then, a few weeks ago, I was charged $6.95 to add $5 of call time. So, the $11.95 that used to buy 49 minutes then purchased only 20.

It is hard to determine exactly how the fees are being applied: The commissions system is opaque, with the prison itself collecting a portion of the companies’ revenues, leading the companies to charge more service fees to an inmate’s phone account to make up the difference.

These fees are an additional money grab by the phone companies and the prison commissions system. There’s a fee to create an account, a fee to fund an account, even a fee to get a refund. The companies are also taking advantage of a loophole in the F.C.C. order that allows them to add special fees for single calls by a user who doesn’t want to set up an account with them. For the “PayNow” option from Securus, for example, the call cost is $1.80, but the transaction fee is $13.19. Before the F.C.C.’s order was implemented, ancillary fees added nearly 40 percent to phone call costs for prison customers.

Earlier this year, while researching for the Prison Policy Initiative, a Massachusetts-based think tank, I discovered that, partly to offset lost revenue from the F.C.C.’s rate-capping, inmate call providers were making agreements with financial service companies like Western Union and MoneyGram to share the money-sending service fees for purchasing phone time.

The phone companies’ strategy was clear before the F.C.C.’s rate cap kicked in. Last year, Securus acquired JPay, one of the nation’s largest prison financial services providers. JPay handles financial transactions for 70 percent of prison inmates; its fees are as high as 35 to 45 percent of the money being sent. JPay could potentially charge a fee to create a JPay account to pay the service fee to load a Securus phone account.

It’s not just that this system is exploitative and cruel, taking from those who have little enough already. But this profiteering is also imposing costs on society. It’s been established that regular contact between inmates and their friends and family on the outside lowers the rate of reoffending upon release. So, if that contact is rationed because of phone company profiteering, the result is more recidivism.

I know this from my own experience. Prison calls are made collect — that is, the called party must agree to speak to you. When that person presses “1” to connect with you, it’s a sign of acceptance, that your eventual homecoming won’t be so hard.

I called my family every day I could. Transcripts of the conversations might make it seem that the only purpose of my calls was to inquire about legal proceedings. In reality, it was about connecting with another person who had a much larger worldview than I did inside, someone whose habits and thoughts weren’t being crushed by the institutionalizing routine of correctional life.

It’s true that without the F.C.C.’s intervention, prison phone call rates could have continued to balloon, preventing the contact that helped me and helps so many other inmates. The phone companies may find new ways to charge fees that are outside the F.C.C.’s order; the commission may dispute that. Regardless of the outcome of that legal fight, other regulatory agencies could join the fray.

The Consumer Financial Protection Bureau should be scrutinizing the whole prison service provider market, including the money transfer system and so-called release cards — prepaid debit cards for prison use that charge higher fees than debit-card customers face on the outside. The Federal Trade Commission, and its Bureau of Consumer Protection, could also buttress what the F.C.C. has achieved.

Prisoners are consumers, too, and deserve protection, for everyone’s benefit.

Chandra Bozelko, who served six years in York Correctional Institution in Connecticut, is the author of the poetry collection “Up the River: An Anthology.”

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