Prison banker cuts fees after Center report

Introduction

JPay Inc., the biggest provider of money services for prisoners, has eliminated fees for sending money orders to inmates in three states, creating a free deposit option for families of more than 100,000 people incarcerated in Indiana, Ohio and Oklahoma.

The move comes after a Center for Public Integrity report showed that the families of hundreds of thousands of U.S. inmates had no way to send money to their incarcerated loved ones without incurring high fees. Several of the prison systems that had no free option for money transfers contracted with JPay for their inmates’ financial services.

JPay is one of the largest prison bankers, companies that provide financial services to inmates and their families, sometimes charging high fees and sharing their profits with the agencies that contract with them. The company handled nearly 7 million transactions last year and expects to transfer more than $1 billion this year.

JPay and other prison bankers have become central players in a multi-billion dollar economy that shifts the costs of incarceration onto families of prison inmates, according to the Center’s report. Families must send money to help pay for necessities like toilet paper and winter clothes that used to be provided by the government. JPay says it handles money transfers for 1.7 million offenders, or nearly 70 percent of the inmates in U.S. prisons.

JPay did not respond to several emails and phone calls requesting comment about the decision to eliminate some fees. The company’s founder and CEO Ryan Shapiro earlier said The Center’s questions about money order deposit fees forced him to consider the impact of policies that affect the company’s poorest customers. He said he would seek to convince states to provide families with a free deposit option.

The change was confirmed by John Witherow, director of Nevada CURE, an inmates’-rights group. Witherow said he received an email announcing the change from JPay’s public relations manager sometime in the past two weeks. A spokesman for the Indiana Department of Corrections also confirmed the change. Spokesmen for the Ohio and Oklahoma departments did not respond to requests for comment.

The fees families pay to send money to an inmate vary from state to state. Electronic transfers almost always incur a steep fee charged by JPay or another private vendor. Some states let vendors charge a fee to deposit funds sent by mail but most offer money order deposits as a free option. Florida, an outlier, charges its own processing fee for money order deposits.

Before JPay and its competitors introduced electronic payments in prisons, inmates’ families typically mailed money orders directly to the facility where their relative was locked up. Many say the process was faster and more convenient than going through JPay. JPay grew rapidly in the past 12 years by offering to save states time and money by handling all deposits into inmate accounts. In exchange, the company is allowed to charge families fees as high as 45 percent for electronic transfers.

In ten states, JPay processed money orders for free, while four states allowed the company to charge fees of $1 to $2 for accepting a money order.

After last week’s change, Kansas is the only state where JPay still charges a fee to accept money orders. In the email forwarded by Witherow, JPay PR manager Jade Trombetta says the company is in talks with Kansas to eliminate the fee for money order deposits in that state.

Florida also charges a 50 cent fee for money order deposits, according to the state’s contract with the company. The other remaining states that lack a free option for inmates to receive money are Arizona, Colorado, Kentucky, Mississippi, Utah and Wyoming.