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CFPB acts against prison financial services company

The CFPB on Tuesday announced it took action against the prison financial services company JPay for violating the Consumer Financial Protection Act by charging consumers fees to access their own money on prepaid debit cards that consumers were forced to use.

JPay also violated the Electronic Fund Transfer Act when it required consumers to sign up for a JPay debit card as a condition of receiving government benefits – in particular, “gate money,” which is money provided under state law to help people meet their essential needs as they are released from incarceration. The consent order severely limits the fees JPay can charge on release cards going forward, allowing only inactivity fees after 90 days without card activity. The order also requires the company to pay $4 million for consumer redress and a $2 million civil money penalty.

JPay, a Delaware company, headquartered in Miramar, Fla., is a dominant provider of financial services to prisons and jails nationwide. JPay is owned by the private equity firm Platinum Equity Partners. Since 2011, JPay has provided approximately 1.2 million debit release cards to consumers. JPay calls itself “a highly trusted name in corrections,” but the company leveraged its relationships with state and local departments of correction to impose fees on consumers exiting the prison or jail system. JPay’s fee-bearing debit release card replaced cash or check options previously offered by state departments of correction. The Bureau's Consent Order states that JPay—

  • Abused its market dominance
  • Illegally required consumers in certain states to receive protected government benefits on debit release cards
  • Charged fees without authorization
  • Misrepresented fees to consumers

The Bureau's Consent Order requires JPay to:

  • Stop charging most fees. JPay cannot charge any fees on release cards, except an inactivity fee after 90 days of inactivity
  • Refund harmed consumers by paying $4 million to the Bureau for monetary relief and damages for injured consumers
  • Pay a civil money penalty of $2 million to the Bureau
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