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Since you asked: Can correctional facilities negotiate phone contracts that prohibit deposit fees? (Yes! Many do.)

We review the evidence and find 15 states that said no to unnecessary fees. Who will be next?

by Peter Wagner, November 20, 2020

The high cost of calling home from prisons and jails rightly gets a lot of attention in the press, but the industry’s practice of tacking on hidden fees is getting an increasing amount of attention from regulators and the savviest correctional facilities. These fees can be called by a variety of different names and can add up to significant costs to the families of people in prison. The problem got so bad that the companies were potentially making more from fees than from selling their product — phone calls.

The good news is that in 2015, the Federal Communications Commission prohibited or capped many of the fees that companies can charge consumers to open, have, fund or close an account. Most notably, the FCC capped the amount that can be charged for an “automated payment” i.e., to make a credit card deposit via the internet or a telephone keypad, at $3. At the time that the FCC capped those fees, some prison phone providers were charging fees as high as $9.50 to make a deposit, despite the fact that most companies in most other industries would be so thrilled to have customers pre-pay for services that they wouldn’t charge a fee at all.

The even better news is that some correctional systems are standing up for the low-income families that pay for these calls by pushing back against some of these unnecessary fees. We found that 15 state prison systems and at least one county jail1 have eliminated automated payment/deposit fees entirely.

State prison systems where there is no credit card fee to make deposits to prepaid accounts, October 2020

When consumers make pre-payment deposits to receive phone calls from these 15 state prison systems, consumers are charged only for the amount they are pre-paying for calls and not an additional payment fee. In October 2020, we attempted to make deposits to receive calls from each of the 50 states on the relevant providers’ websites, and discovered that in these 15 states, no additional fee was charged. In all other states, a $3 or similar payment fee was added to our proposed payment.
State Prison System Vendor
Arizona ICSolutions
California GTL
Delaware GTL
Indiana GTL
Kansas ICSolutions
Maryland GTL
Michigan GTL
Minnesota GTL
Montana ICSolutions
New Jersey GTL
Ohio GTL
Oregon ICSolutions
South Carolina GTL
Virginia GTL
West Virginia ICSolutions

Our survey looked only at the results of these contracts, but it seems clear from the available information that this outcome was the result of savvy negotiating by the facilities and not the generosity of the providers. How these contracts came to be is not always readily or publicly available, but we discovered enough evidence from the small number of readily available records to conclude that most or all of these 15 states sought out this result. For example, the original Requests for Proposals in Indiana and New Jersey said that the states would not accept bids that included deposit fees. And while we did not have access to Oregon’s original advertisement, the contract includes a prohibition on charging fees.

In sum, if states want to prohibit their phone companies from sticking their hands into consumer’s pockets with unnecessary fees, they can do so. Fifteen of them already have.

 

Footnotes

  1. We did not attempt to survey deposit fees for calls from jails, but we know that at least one county jail contract — Dallas, Texas with Securus — prohibits deposit/pre-payment fees.  ↩

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