JPMorgan Settles Lawsuit for High Prepaid Fees Charged to Ex-Inmates
JPMorgan Chase has settled a class action lawsuit for charging high fees on prepaid debit cards issued to ex-prisoners. The bank agreed to pay $446,822 to former prisoners affected by the high fees, and may face up to $250,000 in additional fines to pay for court costs.
JPMorgan is the exclusive provider for prisoner “release cards” at the federal level. These cards contain money the prisoners earn by working during their sentence or collect from family contributions during their time in prison. Thanks to a loophole in prepaid card regulations, Chase and other banks were essentially able to charge whatever fees they wanted on these cards, including a $1.50 balance inquiry fee and a weekly maintenance fee of $2.50.
The Financial Times noted additional fees associated with prisoner release cards, such as a $24.50 replacement card fee for lost cards and a $1.50 inactivity fee for people who did not use their card for a month.
Since the case was completed, Chase has begun waving fees for select cardholders, and there will likely be changes to the future fee structure. Until then, federal prisoners should pay attention closely to the terms of agreement for their card usage to reduce the charges on their prepaid cards.