Fraudulent practices were detected by a federal agency, concerning debit cards given to recently released prisoners. JPay, a company owned by a private equity firm, was ordered to pay $6 million for overcharging formerly incarcerated individuals by adding hidden fees on their debit cards, according to The Washington Post.
“[The company] exploited its captive customer base, harming the newly released and their families,” tweeted CFPB Director Rohit Chopra, according to the Post.
JPay, under the agreement, cannot attach any fees to the debit cards it provides to those released from prison, except for an inactivity fee after 90 days. JPay debit cards contain money earned from prison jobs and money received from people’s families.
Before leaving prison, incarcerated people are required to set up an account with JPay in order to receive their “gate money” (state benefits). The CFPB found that the fees attached to the debit cards were in some cases different from the ones disclosed on the recipients’ cardholder agreements, reported the article.
“JPay cooperated fully with the CFPB in this matter, guided by our organization’s transformation agenda that emphasizes working collaboratively with regulators, reforming certain past business practices, and making products and services more affordable and accessible,” said a statement form Jade Trombetta, a JPay spokesperson.
In 2013, JPay turned a profit on revenue of more than $500 million. The company was started as an electronic money-transfer service in 2002. It allows families to send money to their incarcerated loved ones to buy commissary items. The company expanded to more than 1,000 facilities nationwide. Platinum Equity Partners later acquired the company.
Mark Barnhill, a Platinum Equity partner, said the company has corrected “certain past practices” and is cooperating with regulators.