Pigeonly Flies Into Telecom Turbulence, Declares Bankruptcy
Pigeonly, Inc., a prison communication startup founded by former prisoner Frederick Hutson, filed for Chapter 11 bankruptcy protection on January 26, 2024, in United States Bankruptcy Court for the District of Nevada in Las Vegas.
Pigeonly contracts with jails and prisons to provide mail services for prisoners for a fee. Essentially, the company receives photos intended for prisoners and photocopies them before guards distribute the copies to individual prisoners—with the goal of preventing introduction of contraband through the mail, especially controlled substances such as fentanyl. The service is called Fotopigeon, and it costs prisoners 50 cents per photo.
Pigeonly also provides voice-over-internet (VoIP) phone numbers to prisoners’ family members that are local to the facility in which the prisoner is confined. The prisoner is then notified about the number via the mail, and when dialing the local number, the call is forwarded to the family member’s phone, reducing the cost of calls. Hutson called this service Telepigeon.
Hutson started Pigeonly with seed money from investors in 2013 after completing a 51-month federal prison sentence for distributing marijuana through the U.S. Mail and FedEx. The company grew exponentially and was highly successful until Spring 2022, when it ran into financial trouble.
First, Stripe, a credit card payment processing company, stopped processing credit card payments Pigeonly received due to a high number of charge backs. Second, Pigeonly experienced a rapid and drastic decrease in revenue during the fourth quarter of 2022 that only got worse in 2023. This is likely due to the convergence of two factors—the national trend of reducing the cost of prisoner phone calls, thereby rendering Telepigeon obsolete, and simultaneous pressure on Fotopigeon from larger companies such as Securus Technologies and Global Tel*Link (now ViaPath) as they entered the prisoner mail-scanning marketplace and offered to send letters and pictures directly to a prisoner’s tablet.
Once it fell over this revenue cliff, Pigeonly tried to make up the cashflow shortfall by obtaining merchant cash advances from what Hutson described as “predatory lenders”; it then was unable to make good on the debt, forcing the company into bankruptcy. The company’s bankruptcy filings do not clearly indicate whether any of its creditors include prisoners or their family members. The case remains active, and PLN will update developments as they are available. See: In re Pigeonly, Inc., USBC (D. Nev.), Case No. 24-10355.
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