A Nevada federal district court has approved a $815,000 settlement in a class-action case challenging the use of fee-laden debit cards that prisoners receive upon release, containing the balance from their inmate trust accounts. The lawsuit, filed by former prisoner Christopher Watkins, named Rapid Financial Solutions, Inc. d/b/a Access Freedom Cards; Axiom Bank N.A.; and Keefe Commissary Network, LLC as defendants.

Upon their release from custody, Nevada prisoners receive any remaining funds in trust accounts on an Access Freedom Card. The cards impose numerous fees, including a $1.50 weekly fee (which starts three days after the card is activated); $2.75 for each withdrawal from an ATM; $1.50 for an ATM balance inquiry; and $2.99 for a replacement card. Some of the fees can be avoided, such as by requesting a check for the account balance or making purchases where MasterCard is accepted.

When Watkins was released from the Stewart Conservation Camp, where he worked as a firefighter, he received his account balance of $431.20 on a prepaid debit card provided by the defendants. He was not informed in advance about the fees he would be charged or how to avoid them, nor did he want to cash out his funds on the card for a check because “he had no way to cash a check without a bank account and it would have been ‘basically impossible’ … to use a check for his post-release travel.” Eventually, $24.02 in fees were deducted from his card balance.

Watkins filed suit in state court in July 2020, challenging the terms of the release debit cards on a number of grounds, including under the Electronic Fund Transfer Act (EFTA) and Nevada Deceptive Trade Practices Act (NDTPA). The case was removed to federal court which granted class certification in 2022, comprised of “people recently incarcerated in Nevada who were required upon release to use prepaid debit cards which carried high fees, without any other alternative means of reimbursement.” See: Watkins v. Rapid Fin. Sols., Inc., 2022 U.S. Dist. LEXIS 207748 (D. Nev.).

On August 26, 2024 the district court granted in part and denied in part cross-motions for summary judgment. First, the defendants’ motion was granted as to all class members covered by a settlement in separate, nationwide litigation involving release debit cards issued by Rapid Financial Solutions, which was revolved in December 2023. See: Reichert v. Keefe Commissary Network, LLC, U.S.D.C. (W.D. Wash.), Case no. 3:17-cv-05848-BHS. [See also: PLN, May 2022, p. 40].

With respect to the EFTA claims, the court held that triable issues of fact remained as to whether Watkins’ card had been validated (i.e., activated) before he received it, triggering the weekly maintenance fees, and whether the release debit cards provided to prisoners complied with federal disclosure requirements. Similarly, disputed material facts existed concerning Watkins’ state law claims for conversion and unjust enrichment, and under the Takings Clause of the Fifth Amendment, which precluded summary judgment.

The district court further found that prisoners were members of the “general public” for purposes of the EFTA in regard to their receipt of release debit cards, and “the weekly account maintenance fees” charged by the defendants “violated the EFTA’s service fee restrictions.” Summary judgment was granted to the plaintiffs on that issue.

Due to unanswered factual questions, the cross-motions for summary judgment were denied as to the NDTPA claims, including whether the defendants were aware prison officials did not allow prisoners to review the cardholder agreement prior to their release. However, the plaintiffs’ motion was granted as to a claim under Section 598.0923(1)(c) of the NDTPA, as it was established the defendants “knowingly violate[d] a federal statute or regulation relating to the sale or lease of goods or services.” See: Watkins v. Rapid Fin. Sols., Inc., 2024 U.S. Dist. LEXIS 152229 (D. Nev.).

Following the court’s summary judgment ruling the parties entered into settlement negotiations and requested preliminary approval to settle the class-action case on November 22, 2024.

The terms of the settlement included monetary damages up to a maximum of $815,000, with $215,000 payable to the class members; $75,000 for the settlement administrator’s fees and expenses; up to $15,000 payable to Watkins, the named plaintiff and class representative; up to $500,000 in attorney fees; and $10,000 in litigation costs.

The class was redefined as “All persons who received a release card between July 31, 2016 and October 20, 2016, or between January 18, 2024 and the present, or opted out of the Reichert v. Keefe settlement, and were: (1) released from a jail, detention center, or prison located in the State of Nevada, (2) entitled to the return of money either confiscated from them or remaining in their inmate account when they were released, (3) issued a prepaid debit card from [the defendants] and were subject to fees, charges, and restrictions, and (4) not offered an alternative method for the return of their money.”

There were an estimated 9,688 potential class members, and those who submitted a valid claim could receive “the total fees they were charged for using their release debit card” plus three times those fees. If there are insufficient funds to cover all claims, class members would receive pro rata payments. The class members were represented by the Gabroy Messer Law Office, the Hendron Law Group, LLC and Thierman Buck, LLP. See: Watkins v. Rapid Fin. Sols., Inc., USDC (D. Nev.), Case No. 3:20-cv-00509. 

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