The True Cost of “Correctional Banking”
A Predatory System Designed to Exploit Prisoners and Their Families By Charging Exorbitant Fees so Isolated Prisoners can Communicate with Their Loves Ones.
Prisoners cling to communication with their loved ones; it's their lifeblood. Central to their emotional well-being. Just imagine how badly a mother of young children wants to talk to her family. Meaningful communication can make or break a prisoner.
The good news is, with the help of technology the communication process for prisoners has been modernized— a lot of priosners have a tablet that allows real-time text messaging, video chats, phone calls, and more.
And then there's money so prisoners can buy decent hygiene and food products from the priosn commissary, which means more money transfers.
Such communication comes with a hefty price tag, however.
With rising prices on basics like food, hygiene products, and even phone calls, getting money to incarcerated loved ones has never been more important - or more expensive! Back in the day, sending funds was as simple as mailing a money order to a P.O. box, and voila—within a day or two, your loved one’s account was updated. But a whole new industry has popped up around sending money to prisons, offering faster (but much pricier) ways to keep the support flowing.
This new industry, often called “correctional banking,” is all about processing transfers from family and friends to the prison system—convenient for sure, but with speed that comes at a cost.
Correctional Banking: The Steep Price of Staying Connected
When we talk about high fees, we mean really high. Nowadays, thanks to services like Venmo and PayPal, most people expect low or even zero fees when sending money. But transferring money to prison? That’s another story.
After taking a deep dive into correctional banking fees across 33 states, we found that transfer costs ranged from 5% to a whopping 37% of the amount sent. On average, families pay around 19% in fees for a simple $20 transfer—ouch! And if you’re sending more, say $50, you’re still looking at a 12% fee on average. This adds up to BILLIONS in fees each year.
Even worse, if online payments aren’t an option and you have to make a transfer by phone or in person, the costs can go even higher.
Who’s Behind Correctional Money Transfers?
The correctional banking scene is dominated by three main players: JPay, Global Tel Link (GTL or “Touchpay”), and Access Corrections. These three giants operate across most prison systems, with a few smaller companies sprinkled in for good measure.
Some states have unique providers, like JailATM for messaging or Keefe Group in Arizona. In Mississippi, Premier Services handles money transfers. But for most families, JPay, GTL, and Access Corrections are the main options.
Does Competition Help?
In most states, one company gets exclusive rights for handling money transfers. But about 22% of states allow some level of competition, letting families pick from multiple services. You’d think this would drive down prices, right? Well… not really.
In states where multiple companies operate, we found that fees are slightly lower—around 16% for a $20 transfer versus 20% in monopoly states. But having more options doesn’t always mean cheaper rates, as fees can vary depending on the amount you’re sending. For example, in California, you can choose from JPay, GTL, or Access Corrections, but finding the cheapest option isn’t exactly easy. Some are cheaper for smaller amounts, while others are better for larger transfers, so families might need to do some trial and error. It’s like buying airline tickets, but without the help of comparison sites!
In-House Transfers: Are They Better?
Most states have opted to outsource money transfers, but a handful of them still handle the process in-house. States like Arkansas, Maine, Montana, and Texas let you make online payments through state-run platforms. Interestingly, Arkansas recently brought Access Corrections on board as an alternative to its state-run system, and the fees here are among the lowest. This suggests that when these companies are forced to compete with an in-house service, they miraculously have the ability to keep costs down.
Money Orders: A Low-Cost Option
For those who prefer the traditional route, 45 states still accept mailed money orders, which only cost a stamp and the price of the money order (about $2 total). However, companies that profit from transfer fees tend to deprioritize processing these orders, so they often take longer to process than digital transfers. In fact, companies can legally delay processing money orders. While online transfers get done in one or two days, money orders might take two weeks before they are processed.
Some Hidden Terms and Conditions are Criminal
Correctional banking services often come with pages of fine print, and some of it might surprise you. Here’s a peek at some terms that aren’t exactly consumer-friendly:
No Accountability: Though these companies advertise easy transfers, the fine print can remove any real responsibility to complete them on time.
Money Order Delays: As mentioned, companies usually process online transfers in one or two days, but money orders can take up to ten business days—almost two weeks.
Privacy Concerns: Some services reserve the right to share your data broadly. Other companies, like JPay, even request a credit check, despite not extending credit!
Data Monetization: Some companies may use your information for marketing purposes, with little to no transparency about how.
Dispute Resolution: Arbitration clauses often prevent you from taking issues to court. JailATM even mandates arbitration by the National Arbitration Forum, a group that stopped consumer arbitrations in 2009 after legal issues.
With policies like these, it’s clear the companies have created a system that serves their interests over consumer needs. Families trying to support loved ones are left with little transparency or protection.
From Fine Print to Fair Practice: Reforming Correctional Banking Policies
Improving the fairness of money transfers to incarcerated loved ones begins with greater transparency and access to information for families. Families should advocate for clear, accessible data on fees across available options, so they can make informed choices. By requesting side-by-side comparisons of transfer costs and processing times for each option, families can better understand the total costs and avoid paying unnecessarily high fees. Greater clarity would not only ease the financial strain on families but also empower them to choose the most budget-friendly options with confidence.
Regulators can also play a powerful role by stepping in to ensure fees remain within reasonable limits, preventing service providers from overcharging vulnerable families. Establishing fee caps or standards on correctional banking services would protect against exploitation, keeping transfer costs fair and accessible. By actively monitoring these companies and enforcing penalties for excessive charges, regulators can help ensure that these essential financial transactions serve the public’s interest rather than corporate gain.
Procurement officials, too, hold a responsibility to prioritize cost-effectiveness and transparency when awarding contracts for correctional banking services. Selecting vendors should involve careful scrutiny of their pricing structures, data privacy practices, and commitment to fair policies. By choosing companies that meet high standards of accountability and consumer protection, officials can set a precedent that encourages others in the industry to follow suit. Transparent, fair contracts also help reduce the financial burden on families, making it easier for them to stay connected with their loved ones.
For the correctional banking companies themselves, it’s time to simplify and clarify their terms, providing straightforward information about fees and eliminating overly restrictive clauses. This not only helps restore consumer trust but also makes it easier for families to understand the true cost of each transaction. By ensuring their policies are accessible and user-friendly, these companies can offer a better experience to the families who rely on their services and reduce the backlash that often accompanies complex or hidden terms.
Ultimately, it would be most effective for states to regulate money-transfer fees directly, as this would create a standardized, fairer system that makes it easier for families to support their incarcerated loved ones without incurring steep costs. Enacting these improvements would lead to a correctional banking system that respects families’ needs, helping them maintain crucial relationships without the added stress of navigating complex and costly fees.
And that's just on the front-end of the transaction. Prisoners are then charged ridiculous fees for each text, email, phone call, or video call. Same goes for renting a movie (on their tablet) or listening to music.
There is no reasonable explanation for such outrageous fees. But it sure is profitable.
