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Telecoms Exploiting Legal Loopholes to Price Gouge Prisoners and Their Families

by Jacob Barrett

According to a report published by the Prison Policy Initiative (PPI) on December 15, 2022, for-profit telecom companies are using loopholes in the law to price-gouge prisoners and their families on the cost of phone calls and video visits.

The Federal Communications Commission (FCC) has slowly set regulatory guidelines which have resulted in significant reductions in phone call rates in prisons and jails. [See: PLN, Sep. 2021, p.12.] But firms providing these services have found ways to bypass the restrictions.

The PPI report found four classes of abusive fee tactics which the FCC is trying to reign in. First, the FCC has issued an order which should take effect sometime in 2023, setting provider fees at $5.95. The cap will stop for-profit companies from colluding with Moneygram and Western Union to inflate payment fees.

Second, the FCC has opened for public comment the possibility of banning “double dipping” fees. At least six providers charge up to 21% over the $3 cap on automated fees by adding a “pass through” charge to recover the credit card processor’s fee in the transaction. This is like getting home from dining out to find the restaurant padded your tab with its credit card processing fee – in other words, it’s infuriatingly unfair.

Third, the FCC has identified the need to change, but has not taken steps to reform, the practice of “single call” fee abuse. This happens when a telecom provider unscrupulously steers customers that do not have an account to a uniquely expensive type of call — costing as much as $9.99 to $14.99 each.

While the FCC did limit deposit fees, the companies have utilized loopholes to push additional charges on top of the call. Also, according to the report, the FCC closed a loophole which allowed companies to exploit prisoners and their families by charging “inactive account fees.” If an account was inactive, through lack of use, the companies would simply confiscate any remaining balance to cover this “fee.”

In the decade after initiating its inactive account fee scheme in 2011, ViaPath, formally Global Tel Link (GTL), confiscated at least $96 million from prisoners and their families, earning even more in interest on the ill-gotten funds. So, the company got off relatively easy with a $67 million settlement of a resulting class-action suit in December 2021, plus an $18.675 million fee award to class attorneys in August 2022– especially considering many victims may not make claims, further reducing the punishment’s sting. [See: PLN, Apr. 2022, p.32; and Mar. 2023, p.63.]

The PPI report tracked how ViaPath and its big competitor, Securus, have expanded their efforts to exploit prisoners and their families with video calling, tablets, electronic messaging, debit release cards and money transfer platforms, which prisoners’ families use to send money to loved ones and communicate with them. GTL, for example, requires families and prisoners to give up all rights to photos and videos they exchange over the company’s service and allow the company to use them in any manner seen fit – even selling them to third parties.

These non-phone services and products are either not regulated or are less regulated than phone services, the report notes. This lack of oversight allows companies to find new and creative ways to “double dip” from the meager funds of prisoners and their families – as a group already suffering the country’s highest rate of poverty before incarceration.

As part of its report, PPI made several suggestions for state and federal legislative changes to reduce prison and jail telecom costs, including regulating video calling; ending double dipping fees; and lowering caps on per-minute phone calls.

However, since many legislators themselves profit from investments in these same companies, it is unlikely they will be swayed to make meaningful changes without costly litigation challenges.

PPI suggests that state and local governments enact legislation to guarantee the most equitable solution for connecting prisoners with loved ones: Agency-sponsored calls, or “calls for free.” Under this reform, governments that incarcerate their citizens also pay costs of needed communications. Currently only a few states and large cities have adopted this system, including most recently California. [See: PLN, Apr. 2023, p.43.]

In addition, PPI recommends that state and local governments include a “technological parity” provision guaranteeing that other communications services, such as video calling and electronic messaging, are also provided for free. See: State of Phone Justice 2022: The Problem, the Progress, and What’s Next, PPI (2022).

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