At a time when the cost of a typical phone call is approaching zero, people behind bars in the U.S. are often forced to pay astronomical rates to call their loved ones or lawyers. Why? Because phone companies bait prisons and jails into charging high phone rates in exchange for a share of the revenue.
The good news is that, in the last decade, we’ve made this industry considerably fairer:
However, the vast majority of our progress has been in state-run prisons. In county- and city-run jails — where predatory contracts get little attention — instate phone calls can still cost $1 per minute, or more. Moreover, phone providers continue to extract additional profits by charging consumers hidden fees2 and are taking aggressive steps to limit competition in the industry.
These high rates and fees can be disastrous for people incarcerated in local jails. Local jails are very different from state prisons: On a given day, 3 out of 4 people held in jails under local authority have not even been convicted, much less sentenced. The vast majority are being held pretrial, and many will remain behind bars unless they can make bail. Charging pretrial defendants high prices for phone calls punishes people who are legally innocent, drives up costs for their appointed counsel, and makes it harder for them to contact family members and others who might help them post bail or build their defense. It also puts them at risk of losing their jobs, housing, and custody of their children while they are in jail awaiting trial.
It is well within the power of both prisons and jails to negotiate for low phone rates for incarcerated people, by refusing to accept kickbacks (i.e. commissions) from the provider’s revenue and by striking harder bargains with the providers. And many state prisons have done so: Illinois prisons, notably, negotiated for phone calls costing less than a penny a minute.
But in Illinois jails — which are run not by the state but by individual cities and counties — phone calls cost 52 times more, with a typical 15-minute call home from a jail in Illinois costing $7. In other states, the families of people in jail have to pay even more: A call from a Michigan jail costs about $12 on average, and can go as high as $22 for 15 minutes (compared to $2.40 from the state’s prison system).
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On average, phone calls from jail cost over three times more than phone calls from state prisons. Nationally, the average cost of a 15-minute call from jail is $5.74. This table and the map below show just how much more local jails are charging in each state than state prisons for the same 15 minute in-state phone call:
|State||Highest cost of a 15 minute in-state call from a jail (2018)||Average cost of a 15 minute in-state call from a jail (2018)||Cost of a 15 minute in-state call from a state prison (2019)||How many times higher the average jail rate is compared to the state prison's rate|
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|State||Highest cost of a 15 minute in-state call from a jail (2018)||Average cost of a 15 minute in-state call from a jail (2018)||Cost of a 15 minute in-state call from a state prison (2018)||How many times higher the average jail rate is compared to the state prison's rate|
What accounts for these vast price disparities? Local jails are not significantly more expensive to serve than state prisons. Rather, phone providers have learned how to take advantage of the inherent weaknesses in how local jails, as opposed to state prisons, approach contracting. The result is that jails sign contracts with high rates that are particularly profitable for the providers.
State prisons have, compared to jails, several advantages:
Jails, meanwhile, are vulnerable to signing bad contracts because:
So to recap, the companies are savvy and very effective at cutting self-serving contracts with the jails. But in addition to their high rates in jails, companies also slip in hidden fees that exploit families and, as we will see, shortchange facilities.
Phone providers are counting on facilities, regulators, legislators, journalists and the readers of this report to focus only on per-minute phone rates, ignoring their other major source of revenue: fees.
Because the typical reader unfamiliar with telecommunications regulations would assume that rates and fees are the same thing, it is helpful to step back and clarify our definitions:
Charging high consumer fees allows phone providers to technically abide by rate caps while generating a new source of revenue — one on which, as a bonus, they do not have to pay commissions to facilities. As long as these fees are ignored or dismissed as an “ancillary” issue, companies will continue to use them as — in the FCC’s words — “the chief source of consumer abuse.” Historically, these fees are not trivial, but “can increase the cost of families staying in touch … by as much as 40%.”
To its credit, the FCC made tremendous progress on this issue in 2015, capping some fees and eliminating others.12 Just one of the reforms — capping the fee charged for a credit card purchase (to a still significant $3.00)13 — has saved consumers $48 million every year since.14
Sadly, the most unscrupulous providers have found ways to evade these new regulations, and continue to charge unconscionable fees.
For example, many people living in poverty (who are among the most likely to be incarcerated or have incarcerated loved ones) do not have bank accounts and often pay their bills by money transfer via WesternUnion or Moneygram.15 WesternUnion and MoneyGram charge a standard price of about $6.0016 to send a payment to most companies, including GTL,17 NCIC, Telmate, Paytel, or ICSolutions. (See table.)
|Provider||Moneygram Fee||WesternUnion Fee|
However, other companies have arranged18 hidden profits in these third party payment systems. For the same $25 payment to Amtel, Lattice or Securus, Western Union and MoneyGram charge a shocking $10-12. The explanation is that Western Union and MoneyGram are collecting a portion of this fee on behalf of the phone providers, something that the FCC intended to prohibit. Amtel has even admitted to the FCC that it receives a portion of Western Union’s fees. Western Union calls these payments a “revenue share” in its correspondence and a “referral fee” in its contracts. Families and facilities would be right to call this hidden fee a form of exploitation.
For example, Securus goes out of its way to make it hard for family members to create and fund accounts in an efficient manner. Rather than encourage families to create pre-paid accounts — or to add funds to a depleted account — Securus instead steers people to pay for each call individually. By emotionally manipulating family members into paying for single calls rather than creating accounts (see comic below), the companies drive up fee revenue.19 Other services — such as charging families to listen to voicemails from their loved ones in jail — similarly manipulate consumers and increase revenue from fees. Neither public safety nor consumer “convenience” benefit from these unnecessary but highly profitable call products.
It’s easy to see how the phone providers benefit from imposing a variety of burdensome fees, but how this practice also hurts facilities does not get enough attention. Facilities’ commissions come from phone calls themselves, not the fees attached to them. Facilities should therefore want families to be making more phone calls, but when families are bled dry by high fees, the number of calls they can afford to make goes down. That outcome is fine with the providers, but leaves the facilities with less revenue than they expect. (For sheriffs who already feel uncomfortable charging families $1/minute, understanding that they, too, are being ripped off by providers should push them to negotiate for contracts that prioritize the interests of local families over large corporations.)
Phone providers, as we explain above, are skilled at writing self-serving contracts that burden consumers with unfair rates and fees. It is therefore in the interest of correctional facilities to be careful and conscientious in selecting a phone contract. But the odds of negotiating a fair contract — odds already tilted against facilities, as we’ve shown — are declining as phone companies buy up their direct competitors and the providers of related correctional services.
First, as the below timeline illustrates, providers are limiting facilities’ choice of vendor by directly purchasing their competitors:
The fact that only two companies now control most of the correctional phone market — and are poised to control even more if Securus acquires ICSolutions — is bad news for both facilities and consumers.
But the dominant companies have a second monopoly strategy, which is both more subtle and more harmful: buying non-telephone companies, in order to offer facilities packages of unrelated services in one huge bundled contract.
Bundled contracts combine phone calls with other services, such as video calling technology, electronic tablets, and money transfer for commissary accounts. This allows providers to shift profits from one service to another, thereby hiding the real costs of each service from the facility. Bundling also “locks in” contracts for the provider: It makes it more difficult for the facility to change vendors in the future, because the facility must now change their phone, email, commissary, and banking systems all at the same time.
So even the savviest of facilities are undercutting their future power by signing risky bundled contracts.
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Taming the correctional phone market will require focusing on the areas where injustice is concentrated: Jails (rather than only prisons), fees (rather than only rates), and bundled contracts (rather than phone-only contracts). The bulk of the work lies with specific officials: contracting authorities, state legislatures, public utilities commissions, the FCC and Congress. For those groups, we recommend the following strategies:
|State||Cost of a 15 minute in-state call (2008)||Cost of a |
in-state call (2019)
|Rate Drop (%)|
This report, its visuals and its appendices pull together several different surveys of rates:
The results of this survey are in Appendix Table 2, except for the NCIC facilities. (Unlike most providers, NCIC does not post their facility list or rates online. However, NCIC gave us their facility and price list so that we could calculate the average jail phone cost in each state on the condition that we not include their facility-level data in the Appendix.)
There are some slight differences in these surveys that are relevant to discuss. First, although more comprehensive than our 2016 data, this new survey is still missing data from several smaller prison phone companies that do not post their rates online, including Correct Solutions, City TeleCoin, Turnkey, Consolidated Telecom, Inc. (CTEL), etc. Second, some counties are in one survey but not the other, likely because they changed to or from a provider who does not post rates. Third, our newer survey includes two-lower cost providers that were not in the earlier survey. (Telmate’s decision to finally post their rates online and NCIC’s sharing of their rate data with us slightly reduces the average rates reported. Based on our analysis of counties for whom rates are available for both years, we believe that about half of the $1 decline in the cost of in-state 15 minute phone calls from 2016 to 2018 is the result of actual declines in the rates; and about half is the result of these two lower-cost providers making their data available.
For our survey of WesternUnion and Moneygram fees, we collected Western Union fee data for a $25 payment to different phone providers through in-person payments at Big E’s Supermarket, Easthampton, and Walgreens (225R King St., Northampton, MA) and through online chats with Western Union Representatives.
We collected data on MoneyGram’s fees for a $25 payment through Moneygram’s online BillPay feature and in person at Walmart (337 Russell St, Hadley, MA 01035).
Our interactive feature showing how much a phone call from various local jails would cost is based on our late 2018 survey of jail rates. The feature includes only some of the highest rates from jails in each state, so for the specific rates of all facilities, see appendix 2. The feature always shows the cost of the first minute of a call for the first minute of reading the webpage, and then apportions the cost of subsequent minutes to each subsequent second. For providers who bill only on the basis of individual minutes, our feature therefore underestimates the cost of each call.
Our timeline of consolidation in the industry is built upon reviewing every document we could find and a select number of interviews. The raw data and our notes on sourcing for transaction or change in status is in Appendix 7. Where ever possible, all dates in the visual are accurate to the nearest quarter year. Because it was not always clear when these privately held companies were founded or when they entered the prison or jail phone market, we choose to represent start dates that we were not sure about with a faded line. We used a break in the line to represent companies’ name changes. We did not include some very small companies, such as Michigan Paytel and American Phone Systems, some of which appeared to have substantial business relationships with large phone companies.
For the sidebar about unjustifiably high phone rates from jails, we used commission data for 2014-2017 for select counties in Michigan, which was collected via FOIA requests. With a goal of representing a range of counties, we requested records from at least 54 counties (out of 83 total) and received records from 44. This raw data is available in Appendix 5. To reduce the impact of artifacts in the data and to make it possible to compare counties of different sizes, we averaged the payments from multiple years and used the Average Daily Population reported in the Census of Jails, 2013 to calculate annual revenue per incarcerated person.
These fees to open, have, fund and close accounts added up to almost 40% of what families spent on calls. And because these hidden fees typically do not pay commissions, shifting the families’ costs to fees was a way for the providers to pay facilities far less than they expect. For a summary of the FCC’s fee caps, see footnote 12; and for two of the industry’s current dirtiest tricks, see the How charging families hidden fees shortchanges both families and facilities section. For an alternative calculation on the value of fees, see the 2016 memorandum and contract between Securus and Genesee County, Michigan where the provider and the jail agreed to “move fees into rates” and increase the cost of calls by 23.41¢/minute so that the county and the provider could continue to make just as much money as before the FCC capped fees. ↩
These rates were stayed and ultimately overturned in Global Tel*Link v. Federal Communications Commission, 866 F.3d 397 (2017). ↩
Population analysis based on the 2013 Census of Jails. These are the rates adopted by the FCC, and under review by the Court in the GTL decision. The FCC modified these rates in August 2016, although they were never reviewed by the Court, to 13¢/19¢/21¢/31¢. While these 2016 rates gave more freedom to charge higher rates in smaller jails, they still do not come close to explaining the tremendous difference currently charged by jails as opposed to state prisons. ↩
Looking at kickbacks in terms of annual revenue per incarcerated person is more realistic than looking at percentages in the contract for at least three reasons: 1) Providers can soak up consumer funds via unnecessary fees without paying a commission, and 2) Some providers do not pay commissions for out-of-state calls and can easily reclassify in-state calls as out-of-state, and 3) Providers can steer calls to “premium” call types that pay smaller commissions. Therefore the best way to judge the revenue share in a contract is the actual financial outcome, not just individual terms in that contract. ↩
It’s worth mentioning that many high-commission, low-rate contracts are ICSolutions contracts, and that ICSolutions’ high-volume low-margin strategy appears to be a bid for marketshare as a way to make the company more valuable for acquisition. That is no doubt why Securus is currently seeking regulatory approval to purchase this competitor for $350 million. ↩
And to be sure, when calls are more expensive, people call less and that reduces revenue. To Securus — who also makes profits on ancillary fees and in other ways — this may not be important; but to facilities who seek to claim a portion of call revenue; higher rates can be particularly self-defeating. ↩
National Corrections Reporting Program: Time Served In State Prison, By Offense, Release Type, Sex, And Race, 2009 [zip] Table 8 ↩
See our 2017 summary. This pressure from state legislatures flows directly from the previous bullet point above that the families of people in state prisons are able to exercise effective political power, at least as compared to the families of people in jails. ↩
The median jail size is 46 people and the average size is 216 people (in average daily population), according to the 2006 Census of Jail Facilities. The largest jails tend to have the lowest rates. We found that the most urban counties have rates that average less than half that of the most rural jails. In most states, this pattern continues between the extremes: the more urban the county the more effective the jail is at getting lower rates. See our national figures and details for California, Colorado, Illinois, Iowa, and Ohio in Appendix 9. ↩
In summary, the FCC’s fee caps are:
Most businesses quietly eat the cost of processing credit cards because they consider it the cost of doing business, but because these phone providers have monopoly contracts in each facility, they have zero fear of consumers switching providers to avoid unreasonable fees. ↩
We calculated the annual fee savings from reducing credit card deposit fees from as much as $9 per deposit to $3 per deposit by estimating the number of deposits made by the major providers and apportioning that to their share of the market.
For GTL: According to data GTL submitted to the FCC in 2014, GTL processed 11,408,021 credit card transaction fees. GTL reported charging between $2.00 and $9.00 per credit card transaction, and while we believe that most of those charges were at the high end; we made the conservative assumption that the
typical GTL fee was the average of those two figures, or $5.50 per deposit. The FCC’s order thereby saves consumers $2.50 for each of the 11.4 million deposits made in a year at GTL facilities, for a savings of $28.5 million.
For Securus: Securus did not submit public-use information to the FCC that would allow a similar analysis. However, we know that at the time, Securus’ marketshare was about 1/3rd of GTL’s — Securus has an estimated 15.0% - 19.4% of the market (compared to GTL’s 46.0% - 52.9% - so we therefore estimated that Securus had 3,968,007 transactions in 2014. Securus’ credit card processing fee was $7.95, so reducing the fee to $3 would save $3.95 almost 4 million times a year for a savings of $19.6 million.
Since GTL and Securus control such a large slice of the market, we did not include estimates for other companies. Therefore, the actual money saved is higher than this estimate. ↩
According to the Federal Reserve, 13 million people in the United States do not have a checking, savings, or money market account. Another 46 million people are underbanked, meaning that they had a checking or savings account but also obtained financial products and services outside of the banking system. These populations are more likely to have low income, less education, or be in a racial or ethnic minority group. ↩
Alabama’s regulation of the prison and jail phone industry included an important provision around WesternUnion and MoneyGram payments that is both a model for other regulators and an insight into how these payments work. Alabama required that providers who accept WesternUnion and MoneyGram set the payment cost at no more than $5.95 or provide a copy of the contract demonstrating that the provider is not receiving any kind of revenue share from the payment company. What happened next is telling: Securus stopped accepting WesternUnion in Alabama and WesternUnion lowered the fees — in Alabama only — for the other providers. NCIC told us in an interview that they attempted to get the same $5.95 rate from Western Union nationwide, but that WesternUnion refused. ↩
GTL’s behavior in this regard has improved. As of our last survey on December 28, 2015, Western Union charged $11.95 to send a $25 payment to GTL (then called Global Tel*Link). As of our most recent survey in December 2018, Western Union quoted an approximately standard price of $6.95; so GTL clearly renegotiated their contract with Western Union to comply with the intent of the FCC’s order. (And GTL has never accepted payments via MoneyGram.) ↩
Companies are not powerless over their relationship with processors like WesternUnion. As we documented in 2013, companies can easily change the terms of their contracts with Western Union. ↩
Securus’ “single call” products often go by the brand names Instant Pay, PayNow, or Text2Connect; GTL often uses the brand names Collect2Card and Collect2Phone; and Telmate often uses the name QuickConnect. However, it would appear that the providers are currently rebranding these products and the names may therefore be changing. ↩
For example, GTL purchased Telmate in 2017. Telmate was a major competitor with two state prison contracts, a hundred county jail contracts, and (via subsidiary/partner Talton Communications) the contract for all United States Immigration and Customs Enforcement detention facilities. That transaction gave GTL control of about 50% of the market and eliminated a major competitor in the valuable state prison market. ↩
The Prison Policy Initiative has joined other organizations in objecting to the Federal Communications Commission’s approval of the merger. Additionally, the Department of Justice is conducting an anti-trust investigation into the merger, according to Securus’ public letter to the FCC on October 18, 2018. ↩
The New Jersey Department of Corrections lets county jails opt-in to its contract and most counties have done so. ↩
And of course, to the degree that Chairman Pai believes that the FCC lacks authority to fully regulate this industry, he can support the Senator Duckworth's bill that would clarify that authority. ↩
Securus’s prepaid service is called Advanced Connect and GTL’s is Advanced Pay. For Securus, there were a few counties where prepaid rates were not available. For these counties, we used the Direct Bill price. ↩
This report requests your location so that we can show the rates of phone calls in jails in your state. If you gave us this permission, we discarded your location data as the page finished loading. If you did not give us this permission — or if your browser was configured to decline permission automatically — this report simply makes an educated but unrecorded guess based on your IP address about what state’s data you will find most relevant.
All Prison Policy Initiative reports are collaborative endeavors, and this report is no different, building on an entire movement’s worth of research and strategy. For this report, we wish to single out the contributions of illustrator Kevin Pyle for explaining two of the industry’s dirtiest and most complicated tricks in two comics, as well as Robert Machuga, Jordan Miner and Mack Finkel for their assistance with design and interactive functions. We also wish to acknowledge the editors at The Verge, who (in the excellent 2016 article Criminal Charges) gave us the inspiration for the phone rate clock in this report. We are also grateful to the many colleagues who helped us gather rate data, pointed us to documents on the history of companies in the prison and jail telephone industry, or reviewed drafts. The Prison Policy Initiative’s Communications Strategist, Wanda Bertram, provided invaluable feedback and editorial guidance. We also have to thank our individual donors, who choose to invest in research that gives voice to the 2.3 million Americans behind bars, and who make reports like this one possible.
Peter Wagner is an attorney and the Executive Director of the Prison Policy Initiative. He co-founded the Prison Policy Initiative in 2001 in order to spark a national discussion about the broader harms of mass incarceration. He is a co-author of a landmark report on the dysfunction in the prison and jail phone market, Please Deposit All of Your Money, and has testified in partnership with the Wright petitioners before the FCC in support of stronger market regulations. His other work includes the annual Mass Incarceration: The Whole Pie, Following the Money of Mass Incarceration, groundbreaking research on the racial geography of mass incarceration, and reports putting each state’s overuse of incarceration into the national and international context. He is @PWPolicy on Twitter.
Alexi Jones is a Policy Analyst at the Prison Policy Initiative and a graduate of Wesleyan University, where she worked as a tutor through Wesleyan’s Center for Prison Education. In Boston, she continued working as a tutor in a women’s prison through the Petey Greene Program. Before joining the Prison Policy Initiative in 2018, Alexi conducted research related to health policy, neuroscience, and public health. Her most recent publication is Correctional Control 2018: Incarceration and supervision by state (December 2018).
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