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Court hears industry lawsuit against FCC regulation of prison and jail telephone industry

by Peter Wagner, February 8, 2017

On Monday, arguments were heard in a federal court case challenging the Federal Communications Commission’s regulations of the prison and jail telephone industry. A decision is not expected for several months, but there are a few updates to share nevertheless.

Centurylink, Global Tel*Link, Pay Tel, Securus Technologies, and Telmate sued the FCC when it started regulating the industry. Shortly thereafter, the Prison Policy Initiative joined with the D.C. Prisoners’ Legal Services Project, Citizens United for Rehabilitation of Errants (CURE), The Campaign for Prison Phone Justice, and the Office of Communication, Inc. of the United Church of Christ as intervenors in support of the government respondents in the case, and we were all represented by the Institute for Public Representation at the Georgetown University Law Center. By joining the case, we could help the FCC defend its orders, and ensure that the unique interests of the families and other stakeholders were represented in the case. The recent presidential election made our 2013 decision to intervene especially important.

The presidential election reshuffled the seats at the FCC. Ajit Pai, a commissioner since 2012 was made Chairman, and even though Pai had previously condemned the market failure caused by the corrupt commission system, he ultimately voted against the FCC’s regulations of the industry. And on January 31, the FCC told the Court that it was not going to defend two aspects of the regulations. Even as the FCC refused to support its own regulations, our attorney, Andrew Schwartzman, was able to defend the FCC’s work before the Court. We’re glad we intervened.

We don’t know what the Court is going to decide, and we don’t yet know how or whether Chairman Pai wants the FCC to address what he saw as “market failure” in the prison and jail telephone market.

All of this will become clearer over the next few months, but that leaves us with the immediate question of what families with loved ones behind bars can expect to pay. That too is complicated, in part because the Court stayed part of the FCC’s regulations.

Some states like Alabama have stricter regulations, and some prisons and jails have negotiated better deals for the families, but under the currently-enforceable federal rules:

  • For both prisons and jails, inter-state calls will continue to be capped at a maximum of $0.21-$0.25/minute for debit/prepaid or collect, respectively. (These are the rate caps that went into effect in February 2014. For now, in-state calls are not subject to rate caps.)

In addition, the abusive hidden fees for both inter-state and in-state calls, which our report Please Deposit All of Your Money: Kickbacks, Rates, and Hidden Fees in the Jail Phone Industry found can easily double the price of a call, are now capped at:

  • Payment by phone or website: $3 (previously up to $10)
  • Payment via live operator: $5.95 (previously up to $10)
  • Paper bills: $2 (previously up to $3.49)
  • Markups and hidden fees embedded within Western Union and MoneyGram payments: $0 (previously up to $6.95)
  • Markups and hidden profits on mandatory taxes and regulatory fees: $0 (We’ve seen these markups and hidden profits on “mandatory” taxes be 25% of the cost of the call)
  • All other ancillary fees: $0. (There are many of these charges. Some of the most egregious ones are $10 fees for refunds, $2.50/month for “network infrastructure” and a 4% charge for “validation”.)

Later, if we are successful in Court and nothing else happens:

  • In-state calls will be capped at $0.21-$0.25/minute, just like interstate calls. (This is particularly important because 92% of calls from prisons and jails are in-state, and because in the absence of regulation, jails are increasing the cost of these calls to up to an exploitative $1.50 a minute.
  • The companies will be prohibited from defying the FCC’s rate caps by steering families to abusive “single call” products like Text2Connect™ and PayNow™ that charge $9.99-$14.99 for a single call.

Stay tuned.

6 Responses

  1. Christy Swint says, 8 hours, 6 minutes after publication:

    Can you explain more about the hidden charges with Money Gram? I have to use them to put money on my husband’s phone because telemate said I cancelled a payment made by the bank. I have to constantly pay 6.95 to Money Gram every time I put money on his phone or commissary and so far it’s about $1000 in $6.95 charges over the past 2 years. Are you saying they can’t charge for this anymore????

    1. Lucius Couloute says, 2 weeks after publication:

      This is a particularly complicated portion of the regulations. An oversimplified answer to your questions is that if MoneyGram set the fee to $6.95, then they are likely allowed to charge that. What they aren’t allowed to do anymore is say that the fee is $10, keep their $6.95, and then give the company the remaining $3.05.

  2. Robert Thomas says, 17 hours, 59 minutes after publication:

    The calls are way to much money now. We have a loved one in prison and he is 7 hours away just to go see him. What else do you want from us you have already taken everything. I hope who ever wants the price to go up that someday they will have to pay the rates to and go through what 1000s of people are going through right now. Alot of people are in prison for greed if they raise the rates they should be there to. Think about it get a real job and stop making money from people that are down on there luck.

  3. Bobby says, 7 months, 1 week after publication:

    I have a son in county jail I have put 250.00 on my paytell account average twenty dollars a day or more for about four phone calls a day now This is already highway robbery how is it legal now to charge like this to take advantage of people that don’t have no choice but to use the service because that is the only option they have there are no other choice. Thanks bobby

    1. Lucius Couloute says, 7 months, 2 weeks after publication:

      Hi Bobby, thank you for your comment. We agree that incarcerated people & their families should not be charged outrageous prices in order to stay in touch. We have continued to ask the FCC to implement regulations and we will continue to illustrate why the prison & jail phone industry is particularly exploitive.

  4. Jeanie Johnson says, 9 months, 4 weeks after publication:

    Telmate is a complete rip off! They charge 25 cents per minute and the phones are horrendous! The quality of phone calls are very poor! We cant hear one another and this causes even more stress! I have contacted telmate and when speaking with a Customer Service Rep I am told that they listened to parts of our conversations and ” it sounds like we can hear one another perfectly fine” ! This is very offensive! I wouldnt be making a complaint if we had high quality conversations!
    Yesterday my son had to try 24 times on several different phones to connect 1 time. The message he was getting from automated service was that his password wasnt recognized. Obviously this was telmates error and ate up a ton of my son’s “out” to try to make 1 phone call!
    They dont repair the phones or the service! They insult me by blowing me off when I make a complaint and they rip us off continuously with their MONOPOLY on phone service.
    Why would they fix anything when they are the only option inmates and their families have??

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