Banking and Financial Services

Banks and other financial services companies are involved in mass incarceration through providing services to the private prisons companies and through providing financial services in prisons and for incarceration facilities.

The main companies involved in this sector are:
Wells Fargo, of San Francisco, CA (NYSE: WFC)
Bank of America, of Charlotte, NC  (NYSE: BAC)
BNP Paribas, of Paris, France (OTC: BNPQY)
JPMorgan Chase, of New York, NY  (NYSE: JPM)
SunTrust Banks Inc, of Atlanta, GA (NYSE: STI)
U.S. Bancorp, of Minneapolis, MN (NYSE: USB)
Western Union of Englewood, CO (NYSE: WU)
Access Corrections, Keefe Group inc., of San Antonio, TX (Private)
Global Tel*Link Corporation (TouchPay), of Mobile, AL (Private)
JPay subsidiary of Securus Technologies, of Dallas, TX (Private)
Numi Financial, of Carlsbad, CA (Private)


Prison Bank Accounts

While in prison, incarcerated people are assigned an account that holds the cash they were arrested with, money transfers from outside, and work pay. Prisoners and detainees can use these funds for commissary purchases or savings. In some cases, incarceration facilities charge for toiletries, winter clothes, or shoes.

Until 2002, prisons managed incarcerated people’s accounts, and families could send money directly to the prisons. In 2002, the private company JPay set up accounts through its “commissions” incentive — which offered financially-strapped prisons an opportunity to make money through privatizing these financial services. The prisons receive a percentage of the profits and the associated costs are shifted from the prisons to the incarcerated people and their families. When family members send money to the prison, they are required to pay a fee that can range from 3.7 to 45 percent of the deposit amount, depending on the provider or state contract. For instance, in 2014, correctional facilities in Virginia charged a $6.95 deposit fee to deposit $50 in the account.

Corrections agencies argue that the move towards outsourcing incarcerated individuals’ accounts to “prison bankers” creates faster, transparent, and more efficient monetary transactions. However, families who send money through prison bankers experience extended processing periods, higher fees, and limited alternatives to the electronic transfers. In the case of industry giant JPay, families that opt out of using electronic or phone transactions have to wait a month for the money order to be transferred to their incarcerated family member’s account. In November 2014, JPay eliminated fees for sending money orders to incarcerated people in Indiana, Ohio, and Oklahoma. This created a free deposit option for more than 100,000 incarcerated people. Some states, including Arizona, Colorado, Florida, Kentucky, Mississippi, Utah and Wyoming, still charge fees ranging from 50 cents to two dollars. These states do not offer a way to transfer money to incarcerated people without additional fees.

This expanding model of prison banking places low-income families in an even more financially stressful and vulnerable situation. A high proportion of incarcerated people are from low-income families, and these families report foregoing paying utility bills, accessing medical care, or eating on a regular basis to send money to their incarcerated family members.

As prices for necessary goods continue to escalate, along with prison banker fees, incarcerated individuals can quickly accumulate debt. There are cases where newly admitted individuals cannot pay for the initial costs of prison booking fees or basic goods. These costs are then put on the incarcerated person’s account, creating a debt that must be paid off before being able to use any future money transfers.

Release Cards

When released from prison, formerly incarcerated people are issued a release card in a form of a debit card that contains the money left in their prison account. The cards are controversial for their predatory lending practices and lack of alternatives or regulation.

Depending on the company that issued the card and the location of the person using it, release cards may incur a variety of fees, such as monthly maintenance fees, individual transaction fees, charges for checking the account balance, low-balance fees, cash withdrawal fees, and inactive account fees. For instance, in 2015, JPay charged users in Tennessee 0.50 cents to check their account balance, 0.70 cents per transaction, 0.50 cents for balance inquiry, and a $2.99 fee for 90-day inactivity.

Numi Financial, a private company located in Carlsbad, California, is one of the largest providers of release cards. The company issues more than 600,000 release cards each year, making it one of the top ten providers of prepaid cards in the nation. The Numi Financial release cards come with similar fees as the JPay release cards, with people losing between seven and 67 percent of their money to fees.

In October 2016, the Consumer Financial Protection Bureau (CFPB) issued federal protections for prepaid account users, including release cards. The protections came after significant public scrutiny, including recommendations from several Senators and two class action lawsuits against JPMorgan Chase and Bank of America.  The protections include free and easy access to account information, error resolution rights, and protections for lost cards and unauthorized transactions. In addition, the new rules include a “Know Before You Owe” disclosure that provides all of the information on fees for the accounts. Through these new protections, prison release cards were recognized as prepaid cards. However, the CFPB’s new rules failed to address the fact that formerly incarcerated people are a captive market of these cards, as they cannot receive their money in any other way.

Prison Bankers

The largest prison bankers are General Payment Systems, JPay, Keefe Group, Numi Financial, Bank of America, JPMorgan Chase, SunTrust, and Wells Fargo. JPay is an industry leader, managing 1.6 million accounts in thirty states, which are seventy percent of all incarcerated people’s accounts in the U.S. In 2013, JPay generated $50 million from fee revenue alone.

Investments and Loans
Another role banks have in the criminal justice system is acting as major investors and lenders for private prison companies. The two largest private prison companies are CoreCivic, Inc. (formerly Corrections Corporation of America or CCA) and the GEO Group (GEO). Banks offer CoreCivic, Inc. and GEO billions in revolving credit limits, term loans, and bonds that aid these companies in expanding their control of the criminal justice system. The six major lenders are Bank of America, Wells Fargo, JPMorgan Chase, BNP Paribas, SunTrust, and U.S. Bancorp.

CoreCivic, Inc. and GEO are $1.5 billion and $1.9 billion in debt, respectively. One source of the debt arises from revolving credit limits. Both CoreCivic, Inc. and GEO have $900 million credit limits. Bank of America, CoreCivic, Inc.’s administrative agent, secures the loans and credit limit for CoreCivic, Inc.. BNP Paribas is GEO’s administrative agent. When CoreCivic, Inc. and GEO wanted to increase their credit limits, Bank of America and BNP Paribas brought together the other major lenders to negotiate an agreement. As of June 2016, CoreCivic, Inc. has used 49 percent of its credit limit and GEO has used 50 percent.

Banks also provide loans and bonds to CoreCivic, Inc. and GEO. In October 2015, CoreCivic, Inc. was given a loan of $100 million, and in August 2014, GEO was given a loan of $296,250,000. As of June 2016, CoreCivic, Inc. has paid $2.5 million and GEO has paid $5,250,000 of their loans. For bonds, CoreCivic, Inc. and GEO have issued $925 million and $1.5 billion bonds, respectively, as of June 2016.

Debt financing allows private prisons to purchase smaller companies and increase their control on the criminal justice system. GEO has acquired nine new companies since 2005, eight of which were obtained through debt financing totaling $2 billion. CoreCivic, Inc. has used debt financing to purchase two of the three companies it has acquired since 2013.

There are 33 U.S.-based major investors in the for-profit prison industry who own over one million shares in CoreCivic, Inc. and GEO. Activists groups refer to the 33 investors as the “million shares club.” Wells Fargo is a major investor in both CoreCivic, Inc. and GEO Group. As of its 2015 filings with the Securities and Exchange Commission, Wells Fargo owned 779,902 shares in CCA and 438,648 shares in GEO Group.