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JPay Fined in Pennsylvania, Michigan for Operating without a License

JPay Fined in Pennsylvania, Michigan for Operating without a License

As indicated in this issue’s cover story, JPay, a company incorporated in Delaware and based in Miami, Florida, and the industry leader in prison money transfer services, has been fined $408,500 for operating without a license in at least seven states – including Pennsylvania and Michigan.

JPay allows consumers to transfer money by using credit and debit cards through its website and by phone, through cash transfers with cash agent locations that contract with JPay, and by mailing money orders to the company. JPay charges consumers a fee for most money transfers.

The company’s contract with the Pennsylvania Department of Corrections specifies it is the sole provider of electronic fund services for state prisoners.

In August 2011, the Pennsylvania Department of Banking (PDB) concluded an investigation that found JPay had not been licensed as a money transmitter as required by the state’s Money Transmitter Act, 7 P.S. §§ 6101-6018. Yet the company had been transferring money from Pennsylvania citizens to prisoners since December 2004.

The PDB found that JPay did not meet any of the Act’s exemptions; during the investigation, the company was cooperative and provided information and documents to the PDB in a timely manner. Since JPay commenced business in the state, the PDB had received only one consumer complaint concerning the company.

On December 16, 2011, the PDB and JPay entered into a consent decree that required the company to pay an $80,000 fine for violating state law by operating without a license. In return, the PDB granted JPay a license as its part of the agreement. See: Commonwealth of Pennsylvania Department of Banking, Bureau of Compliance and Licensing v. JPay, Commonwealth of Pennsylvania, Department of Banking, Docket No. 11-0197.

In Michigan, JPay was found to be operating without a license as required by the state’s Money Transmission Services Act, MCL 487.1011(1), even though it provided money transfer services through its contract with the state’s prison system.

In November 2012, the company and the Michigan Department of Licensing and Regulatory Affairs entered into a consent order and stipulation. JPay agreed to pay a $152,500 fine, and the Office of Financial and Insurance Regulation agreed to “present and recommend ... approval” of the company’s application for a license. See: In the Matter of JPay, Inc., Michigan Department of Licensing and Regulatory Affairs, Enforcement Case No. 12-11449.

In addition to regulatory fines, JPay has also been sued a handful of times, including 7 times in federal court – most recently in October 2014. All of the cases, filed by pro se prisoners, have been dismissed.

 

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