Guest post by Stephen Raher
Each year, over 12 million people are released from jails and prisons in the United States. When this happens, the correctional facility often owes money to the person being released. This could be money that the person earned while incarcerated, gifts from family, or perhaps funds that a person had they were arrested.
Traditionally, jails and prisons would make payments to released prisoners by cash or check. But recently, facilities across the country have started issuing refunds via prepaid debit cards. These cards come with high fees and complex account agreements. For example, cardholders may have to pay $3.50 per week simply to have a card. Per-transaction fees range up to $0.95 per swipe. Balance inquiries can cost up to $3.95. And some card programs charge simply to close the account and receive a refund.
Fee structures like this are troublesome enough in the free world, where consumers have some degree of choice, but in the context of correctional facilities, people should not be coerced into using pre-paid cards or similar financial products simply to access their own money. These cards are growing in popularity for one simple reason: jails and prisons can shift accounting costs from government budgets onto individual ex-prisoners, because program costs are funded entirely through cardholder fees.
As part of the Consumer Financial Protection Bureau's rulemaking on prepaid cards, the Prison Policy Initiative has submitted comments describing widespread problems with jail release cards and urging the Bureau to restrict the mandatory use of these high-fee cards. The CFPB is accepting comments on proposed amendments to Regulation E through March 23.