Hastings Race and Poverty Law Journal
Volume 17
Number 1 Winter 2020

Article 3

Winter 2020

The Company Store and the Literally Captive Market: Consumer
Law in Prisons and Jails
Stephen Raher

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Recommended Citation
Stephen Raher, The Company Store and the Literally Captive Market: Consumer Law in Prisons and Jails,
17 HASTINGS RACE & POVERTY L.J. 3 (2020).
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The Company Store and the Literally Captive
Market: Consumer Law in Prisons and Jails
STEPHEN RAHER1
Abstract:
The growth of public expense associated with mass incarceration has
led many carceral systems to push certain costs onto the people who are
under correctional supervision. In the case of prisons and jails, this
frequently takes the form of charges and fees associated with
telecommunications, food, basic supplies, and access to information.
Operation of these fee-based businesses (referred to here as “prison
retail”) is typically outsourced to a private firm. In recent years, the
dominant prison retail companies have consolidated into a handful of
companies, mostly owned by private equity firms.
This paper explores the practices of prison retailers, and discusses
potential consumer-law implications. After an overview of the prison-retail
industry and a detailed discussion of unfair practices, the paper looks at
some potential legal protections that may apply under current law. These
protections, however, prove to be scattered and often illusory due to
mandatory arbitration provisions and prohibitions on class adjudication.
The paper therefore concludes with recommendations on a variety of steps
that state, local, and federal governments can take to address the problems
inherent in the current model.

1. The author is grateful to Peter Wagner and all the staff at Prison Policy Initiative for
their support on this and many other projects. For feedback on early drafts, thanks to Lee
Petro, Andy Blubaugh, and the participants at the Consumer Law Scholars Conference at
Berkeley Law, particularly Creola Johnson, Jeff Sovern, Ted Mermin, Matthew Bruckner,
Craig Cowie, Prentiss Cox, Daniel Schwarcz, Myriam Gilles, and Tammi Etheridge. For
providing valuable insights about some of the specific practices in the industry, thanks to Art
Longworth, Alex Friedmann, and Pam Clifton. All images (figures and tables) printed herein
are created by the author or the author has permission to reprint images.
[3]

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Background
Since the 1970s, the number of people incarcerated in U.S. prisons and
jails has skyrocketed. With approximately 2.3 million adults currently held
in correctional facilities,2 mass incarceration is no longer a fringe issue—it
impacts families in every community in the nation.
Numerous
constituencies, from prison guards to utility companies to construction
firms, profit from the current system of incarceration;3 however, literature
on profit-seeking in the carceral economy has disproportionately focused on
companies that construct and manage correctional facilities.4 This
preoccupation with facility operators ignores the explosion of smaller,
privately held firms—such as telecommunications providers, technology
companies, commissary operators, and money transmitters—that have
sprung up to monetize basic every-day life in prisons and jails. These
companies, which I refer to as “prison retailers,” extract money from
incarcerated people and their families in numerous transactions. Despite
the small dollar-amount of most purchases, prison-retail firms can
command aggregate revenue comparable to private prison operators.5
Prison retailing finds historical analogs in the commissaries and
“company stores” that were a key component of the economic peonage
found on post-bellum plantations and settlements organized around
extractive industries.6 This prior generation of company stores met its
2. Wendy Sawyer & Peter Wagner, Mass Incarceration: The Whole Pie 2019, PRISON
POLICY INITIATIVE (Mar. 19, 2019), https://www.prisonpolicy.org/reports/pie2019.html.
3. See generally, Marie Gottschalk, CAUGHT: THE PRISON STATE AND THE LOCKDOWN
OF AMERICAN POLITICS 48 (2015).
4. This focus on for-profit facility operators (such as CoreCivic (f.k.a. Corrections
Corporation of America) and the Geo Group (f.k.a. Wackenhut Corrections Corp.) has been
rightly criticized for over-estimating the political strength of the private prison lobby (in
terms of influencing substantive criminal justice policy), while ignoring the dominant
position of publicly-run facilities, both in terms of fiscal outlays and number of people held.
See Ruth Wilson Gilmore, The Worrying State of the Anti-Prison Movement, SOCIAL JUST.
BLOG (Feb. 23, 2015), http://www.socialjusticejournal.org/the-worrying-state-of-the-antiprison-movement/ (“The long-standing campaign against private prisons is based on the
fictitious claim that revenues raked in from outsourced contracts explain the origin and
growth of mass incarceration.”).
5. Peter Wagner & Bernadette Rabuy, Following the Money of Mass Incarceration,
PRISON POLICY INITIATIVE (Jan. 25, 2017), https://www.prisonpolicy.org/reports/money.html
(“Private companies that supply goods to the prison commissary or provide telephone
service for correctional facilities bring in almost as much money ($2.9 billion) as
governments pay private companies ($3.9 billion) to operate private prisons.”).
6. Laura Phillips Sawyer, Contested Meanings of Freedom: Workingmen’s Wages, the
Company Store System, and the Godcharles v. Wigetnan Decision, 12 J. OF THE GILDED AGE
& PROGRESSIVE ERA 285 (2013) (overview of company-controlled commissaries in eastern
U.S. mining communities); JACQUELINE JONES, THE DISPOSSESSED: AMERICA’S UNDERCLASS
FROM THE CIVIL WAR TO THE PRESENT 136-137 (1993) (discussing ubiquity of company

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demise when laborers became more mobile and were able to travel to other
retailers with more competitive prices.7 In contrast, the modern prison
retail industry has used the guise of security (unquestioned by legislators or
courts) to insulate itself from competition which could threaten its profit
margins.
The modern rise of prison retailing can also be situated within the
historical evolution of the American carceral state. Penitentiaries began as
nominally charitable institutions designed to isolate people and train them
in preparation for an eventual return to the labor force.8 Prison-based labor
was meant either to support the internal needs of a self-sufficient institution
or to earn profits on the open market for the financial support of the
institution. While the idea of the self-sustaining penitentiary was always
partially mythological, today’s correctional facilities have abandoned any
pretense of paternalistic self-sufficiency, opting instead for a model of
extreme austerity, supplemented by the sale of goods and services to those
who can afford it.9
Prisons represent an expansive use of state power, driven by
policymakers of both major political parties who generally claim to support
limited government. The contemporary prison thereby embodies the notion
of the “antistate state,” developed by geographer Ruth Wilson Gilmore,10
stores in a variety of extractive industries); Jack Temple Kirby, Black and White in the Rural
South, 1915-1954, 58 AGRICULTURAL HISTORY 411, 412 (1984) (describing plantation
commissaries as a method of economic control over sharecroppers of both races, but
particularly black farmers); William T. Chambers, Pine Woods Region of Southeastern
Texas, 10 ECON. GEOGRAPHY 302, 307 (July 1934) (describing commissaries in lumber
towns).
7. Harriet L. Herring, Tracing the Development of Welfare Work in the North Carolina
Textile Industry, 6 SOCIAL FORCES 591, 596 (1928) (attributing the decline of company stores
to “[workers] nearness to towns, better roads, and the willingness of small shopkeepers to
venture into the village trade”).
8. David J. Rothman, Perfecting the Prison: United States 1789-1865, in THE OXFORD
HISTORY OF THE PRISON: THE PRACTICE OF PUNISHMENT IN WESTERN SOCIETY 100, 115-117
(Norval Morris & David J. Rothman eds., 1995).
9. The model penitentiary’s progression from producing subsistence goods to
outsourcing the manufacture of such goods to commissary vendors finds yet another parallel
in historical practice—prior to the Civil War, plantation managers, mindful of the cost of
providing a minimum level of “furnishings” for their enslaved workforce, tended to produce
food on the plantation, a practice which ended after the Civil War, when landowners could
focus on growing cash crops, while purchasing food from third-party producers, and passing
the costs along to tenant customers. Forrest McDonald & Grady McWhiney, The South from
Self-Sufficiency to Peonage: An Interpretation, 85 AM. HIST. REV. 1095, 1116 (1980).
10. RUTH WILSON GILMORE, GOLDEN GULAG: PRISONS, SURPLUS, CRISIS, AND
OPPOSITION IN GLOBALIZING CALIFORNIA, University of California Press, 245 (2007) (“The
antistate state depends on ideological and rhetorical dismissal of any agency or capacity that
‘government’ might use to guarantee social well-being.”); see also Ruth Wilson Gilmore,
Organized Abandonment and Organized Violence: Devolution and the Police (U. of Calif.

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and reflects the concept of “neoliberal penality” promoted by legal theorist
Bernard Harcourt.11 Regardless of the theoretical framework one uses to
describe the prison, the ultimate dilemma is the same: The size and extent
of the nation’s carceral infrastructure has grown dramatically at the same
time policymakers have delegitimized policies and institutions that were
designed to protect the health and welfare of the disadvantaged people who
fill prisons and jails. As a result, a common mindset in contemporary
correctional systems is to shift as many costs of basic subsistence as
possible onto incarcerated people.
Prison retailing also changes the ways in which the state relates to
incarcerated people. While American prisons historically strove to isolate
people from the outside world and harness their labor for the benefit of the
institution, by the late twentieth century incarcerated populations no longer
represented a potentially valuable source of labor, but rather were surplus
labor to be housed at the state’s expense.12 Seen through this lens, prison
retailing is properly understood as a mechanism by which a state liability
(i.e., the subsistence needs of incarcerated people) becomes a potential
source of revenue for both public agencies and private firms.13 Despite the
rhetorical support for free markets that is professed by many supporters of
mass incarceration (particularly on the political right), prison retailing is
anything but a functioning competitive market. The industry is comprised
for the most part of monopoly providers who share financial interests with
the same agencies that award the monopoly contracts in the first place.14
No discussion of prison retailing would be complete without
acknowledgment of the growing movement of incarcerated people and their
families that has organized to bring public attention to the injustices of the
industry and seek legislative and judicial relief. While organizations and
individuals throughout the country have taken on this important work at

Santa Cruz, Nov. 9, 2015), at 14:45, available at https://vimeo.com/146450686 (defining the
antistate state as “The institutional result of rhetorical, but not real, state shrinkage, with its
attendant devolution . . . of obligations to more local/state levels, or to non-state agencies.”).
11. BERNARD E. HARCOURT, THE ILLUSION OF FREE MARKETS 41 (2011) (“The punitive
society we now live in has been made possible by . . . [the] belief that there is a categorical
difference between the free market, where intervention is inappropriate, and the penal
sphere, where it is necessary and legitimate.”).
12. See Gilmore, supra note 10 at 70-78.
13. See Lisa Guenther, Prison Beds and Compensated Man-Days: The SpatioTemporal Order of Carceral Neoliberalism, SOCIAL JUSTICE, Issue 148, Spring 2017, at 31,
42 (The logic of neoliberal penality “does not primarily exploit the labor power of the
prisoner, nor does it seek to discipline the subject or redeem their soul; rather, it targets
criminalized populations for their potential to be warehoused.”).
14. Harcourt, supra note 11 at 185; In many ways, this seeming paradox is neither
surprising nor unique, given that most American “free markets” are in actuality highly
structured spaces that are governed by “intricate rules . . . all of which distribute wealth.”

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varying levels of impact, special attention is due to Martha Wright and the
other co-plaintiffs in the landmark class action Wright v. Corrections
Corporation of America.15 This lawsuit, filed in federal court in 2000,
challenged the rates charged for phone calls from certain privately operated
prisons. The plaintiffs consisted both of incarcerated customers and an
array of family members. The choice of Martha Wright as lead plaintiff is
notable in part because her situation was representative of the challenges
facing countless families: her grandson was incarcerated in a distant prison,
Wright could effectively communicate only by phone (glaucoma made
reading letters difficult), and as a retired nurse she struggled to pay for
phone calls that could cost $25 to $60 each.16 The litigation spanned
decades, ultimately resulting in a judicial referral to the Federal
Communications Commission (“FCC”), which in turn took over ten years
to issue rules capping prison and jail phone rates.17 The experience of the
Wright petitioners serves as both a model and a cautionary tale. The broad
coalition of individuals and organizations that coalesced around the Wright
petitioners provides a model that can be emulated by others. But the results
are also cautionary: the Wright petitioners achieved a substantial victory in
front of the FCC, only to have the most impactful parts reversed by a
change in Commission members and a divided appellate court. Meanwhile,
in the years that the Wright coalition battled telecommunications carriers,
multiple other types of businesses arose to exploit incarcerated consumers
in new ways.
This article seeks to provide a broad-based overview of the legal issues
15. Complaint, Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Feb. 16, 2000),
ECF No. 1.
16. Colin Lecher, Criminal Charges, THE VERGE (May 11, 2016), https://www.the
verge.com/a/prison-phone-call-cost-martha-wright-v-corrections-corporation-america. While
Wright and her co-plaintiffs were demographically representative of families throughout the
country, they were unique in other respects: the non-incarcerated plaintiffs were residents of
the District of Columbia whose relationships with incarcerated loved ones were thrown into
turmoil in 1997 when Congress closed the D.C. prison system and scattered its residents
throughout the federal prison system. The National Capital Revitalization and SelfGovernment Improvement Act of 1997 not only transferred responsibility for the D.C. prison
system to the federal Bureau of Prisons, but also required at least half of the D.C. prison
population to be placed in privately-operated facilities; Stephen Raher, The Business of
Punishing: Impediments to Accountability in the Private Corrections Industry, 13 RICHMOND
J.L. & PUB. INT. 209, 218, n.81 (2010). The privatization requirement was subsequently
relaxed and only a few hundred people from the D.C. system were actually held in private
facilities as of 2010; see Nat’l Capital Revitalization & Self-Gov’t Improvement Act Status
Report (June 15, 2010) (on file with author).
17. For a timeline of the Wright litigation and resulting rulemaking, see Peter Wagner
& Alexi Jones, “Timeline: The 18-year battle for prison phone justice,” PRISON POL’Y
INITIATIVE BLOG (Dec. 17, 2018), https://www.prisonpolicy.org/blog/2018/12/17/phone_
justice_timeline/.

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related to selling goods and services in prisons and jails. It begins with an
exploration of the types of goods and services sold in prisons, and the
companies that dominate the market. I then discuss specific unfair
practices, followed by an analysis of existing laws that may provide relief to
consumers. The article concludes with policy recommendations for
addressing and ending the unfair business practices that are prevalent today.
Readers should bear in mind that prison retailing is a close cousin to other
financial aspects of neoliberal penality that are beyond the scope of this
article, such as the proliferation of fees and fines associated with judicial
proceedings, bail, probation, or supervised release;18 charging incarcerated
people for medical care;19 or, making people pay for the basic costs of their
own incarceration (so-called “pay to stay” laws).20
Surveying the Landscape of Prison Retailing
The prison retail industry has grown in an unplanned, idiosyncratic
manner. What started as a niche industry occupied by numerous narrowlyfocused companies is now dominated by a handful of conglomerates owned
by private equity firms. To better understand the players and products in
this economic sector, it is helpful to analyze the four essential components
that define any prison retail transaction: the end user, the payer, the facility,
and the vendor.
End Users
Either incarcerated people or their friends and family can be end users,
depending on the product or service being sold. Goods sold through a
commissary are exclusively sold for use by people inside correctional
facilities; whereas telecommunications services are sold for the benefit of
the two parties communicating. Financial products can be targeted solely at
an incarcerated person (release cards), or can be used to facilitate a twoparty transaction (money transfers).
The “customer base” of end users is notable for several prominent
demographic trends. People in prisons and jails are disproportionately

18. Neil L. Sobol, Fighting Fines & Fees: Borrowing from Consumer Law to Combat
Criminal Justice Debt Abuses, 88 U. COLO. L. REV. 841 (2017).
19. Wendy Sawyer, The steep cost of medical co-pays in prison puts health at risk,
PRISON POL’Y INITIATIVE BLOG (Apr. 19, 2017), https://www.prisonpolicy.org/blog/2017/
04/19/copays/.
20. Lauren-Brooke Eisen, Charging Inmates Perpetuates Mass Incarceration,
BRENNAN CENT. FOR JUST. (May 2015), https://www.brennancenter.org/publication/
charging-inmates-perpetuates-mass-incarceration.

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likely to have low pre-incarceration incomes,21 low rates of formal
education,22 high rates of unemployment,23 and high prevalence of mental
illness.24 One might expect policymakers to be receptive to the idea of
enhanced protections for a group of consumers with such pronounced
disadvantages; however, this is not the case when it comes to incarcerated
people. Although families and friends of the incarcerated have made
substantial progress in the last two decades, policy debates on the rights of
the incarcerated are still dominated by stereotypes and prejudices that stack
the deck against the establishment of new rights and safeguards. For
example, introduction of computer-tablet programs in prison should raise
questions about unfair pricing of digital products, but some legislators
inevitably express “disgust” that people are “receiving gifts that will make
their time served easier.”25
In some ways, the political mischaracterization of prison retailing
resembles a new manifestation of the zero-sum fallacy described by
criminologist Frank Zimring: a belief that “[a]nything that hurts offenders
by definition helps victims.”26 Not only is the zero-sum construct logically
faulty, but it in the case of prison retailing, it is factually ill-conceived,
since it is the family members of incarcerated people who often bear the
financial punishment of paying for phone calls or commissary items, even
though families have not been sentenced to any term of punishment.

21. Bernadette Rabuy & Daniel Kopf, Prisons of Poverty: Uncovering the PreIncarceration Incomes of the Imprisoned, PRISON POLICY INITIATIVE (July 2015),
https://www.prisonpolicy.org/reports/income.html (finding median incomes of incarcerated
men and women to be 52% and 42% (respectively) lower than those of non-incarcerated
people).
22. BECKY PETTIT, INVISIBLE MEN: MASS INCARCERATION AND THE MYTH OF BLACK
PROGRESS 15-16 (2012) (finding that 52.7% and 61.8% of white and black males,
respectively, in prisons and jails did not complete high school).
23. See Lucius Couloute & Daniel Kopf, Out of Prison & Out of Work: Unemployment
among Formerly Incarcerated People, PRISON POLICY INITIATIVE (July 2018),
https://www.prisonpolicy.org/reports/outofwork.html (although data is lacking on preincarceration unemployment rates, people released from custody are five times more likely
to be unemployed than the general U.S. population).
24. U.S. DEPT. OF JUSTICE, BUREAU OF JUSTICE STATISTICS, INDICATORS OF MENTAL
HEALTH PROBLEMS REPORTED BY PRISONERS AND JAIL INMATES, 2011-12, (June 2017),
https://www.bjs.gov/content/pub/pdf/imhprpji1112.pdf (finding prevalence of serious
psychological distress among incarcerated people at rates of five times that of the nonincarcerated population).
25. Company Giving Tablets to NY Prisoners Expects to Get $9M from Inmates over 5
years, NYUP.COM (Feb. 15, 2018), http://s.newyorkupstate.com/oIgNXak (quoting New
York Assemblyman Clifford W. Crouch (R-Bainbridge)).
26. Frank Zimring, The New Politics of Criminal Justice: Of Three Strikes, Truth-inSentencing, and Megan’s Laws, 4 PERSP. ON CRIME AND JUST. 1 (2001).

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Payers
Much of the money spent at prison retailers comes from families and
friends of the incarcerated, either directly or indirectly. People typically
enter prison with little or no money and earn shockingly low wages while
incarcerated, to the extent they are employed at all.27 Historically, this
meant limited opportunities to purchase goods or services inside
correctional facilities, due to the lack of a viable customer base. But the
rising prevalence and falling price of electronic payments have made it
increasingly feasible to collect payments (even in small amounts) from nonincarcerated payers. Throughout this article, I use the phrase “family” or
“family member” as shorthand for a non-incarcerated payer. Such payers
can also be friends, attorneys, or anyone who wants to communicate with
an incarcerated correspondent, although most commonly the payer is a
spouse, parent, sibling, or child of an incarcerated loved one.
Direct payments can take several forms.
In the case of
telecommunications, the family member can be a party to the transaction
being purchased—for example, as the recipient of a collect call. Families
can also purchase some tangible goods through prison commissaries,
although these purchases are sometimes limited to bundled “care
packages.”28 Alternatively, family can pay for specific services by sending
an advance payment that is held by the vendor.
Indirect purchasing entails a family member transferring money to an
incarcerated recipient who then uses the funds to make subsequent
purchases. The funds are held by the correctional facility in a pooled
deposit account, typically referred to as an “inmate trust account.”29 Once
the money is in the trust account, the recipient can usually use it for any
purpose not prohibited by prison regulations. Assuming that the transferor
trusts the recipient to manage his or her own funds, transfers to trust
accounts have the benefit of versatility—the money in a trust account can
be used for a variety of purposes, and is not restricted to one specific
service or vendor, in contrast to customer prepayments where money is
locked into a specific vendor and/or service, and is usually nonrefundable
and subject to arbitrary expiration provisions.
The benefit of trust-fund versatility is offset in many jurisdictions by
27. Wendy Sawyer, How much do incarcerated people earn in each state? PRISON
POLICY INITIATIVE BLOG (Apr. 10, 2017), https://www.prisonpolicy.org/blog/2017/
04/10/wages/ (national survey finding hourly wages of 14¢ to $1.41 for incarcerated
workers).
28. Taylor Elizabeth Eldridge, The Big Business of Prisoner Care Packages: Inside the
Booming Market for Food in Pouches, PRISON LEGAL NEWS, Oct. 2018, at 28-30 (profiling
major sellers of prison care packages).
29. Raher, infra note 69.

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mandatory deductions from trust accounts to cover fines, victim restitution,
or costs of confinement.30 These deductions can have the effect of steering
payers to economically inefficient transactions, such as prepaid phone
accounts or care packages, in an effort to avoid loss of funds through
mandatory deductions.
Facilities
Correctional facilities play two significant roles in prison retailing.
First, and most obviously, the facility selects the vendors who sell goods
and services, usually under a long-term contract that grants the vendor the
exclusive right to sell certain items in the facility. Second, the facility may
receive compensation under the contract, thus making correctional agencies
financially interested in prison-retail revenues.
Any discussion of facilities must begin with an important distinction
that is often overlooked in the popular press: prisons and jails are
remarkably different in both their operations and demographics. Prison
systems are limited in number (fifty state departments of corrections, plus
the federal Bureau of Prisons) and are typically large enough to command
certain economies of scale and employ experienced procurement staff.31 In
contrast, the nation’s jails consist of a sprawling patchwork of facilities run
by approximately 2,850 different jurisdictions.32 Many jails are small with
limited resources—over one-third of people in jail are held in facilities with
total populations of less than five hundred.33 In addition, the majority of
people in jails (76%) have not been convicted of a crime.34
The size of a correctional system is usually reported in terms of daily
population—a snapshot of population on a given day. This metric disguises
30. See e.g., 3 Michael B. Mushlin, Rights of Prisoners § 16:20 (5th ed. rev. 2018)
(discussing attachment of financial assets held by incarcerated people); Deductions from
Pennsylvania prisoner’s trust account require notice, PRISON POL’Y NEWS v.29, n.11 (Nov.
2018) (discussing Pennsylvania law); Or. Rev. Stat. § 423.105 (mandatory deductions of 1015% from all trust account deposits); Colo. Rev. Stat. § 16-18.5-106 (mandatory deductions
of at least 20% from all trust account deposits).
31. U.S. DEPT. OF JUST., BUREAU OF JUSTICE STATISTICS, PRISONERS IN 2014, (Sept.
2015), https://www.bjs.gov/content/pub/pdf/p14.pdf (the smallest state prison system (North
Dakota) housed approximately 1,700 people in 2014, but two-thirds of the states ran prison
systems with populations over 10,000).
32. U.S. DEPT. OF JUST., BUREAU OF JUSTICE STATISTICS, JAIL INMATES IN 2016, (Feb.
2018), https://www.bjs.gov/content/pub/pdf/ji16.pdf.
33. Id.
34. Sawyer & Wagner, supra note 2. The 76% figure is calculated based on the
number of people confined in jails on behalf of local jurisdictions (approximately 731,000),
but excluding the roughly 120,000 people held in jails on behalf of federal agencies. If one
were to include the latter category, then the percentage of non-convicted people in jails
would drop to 63%.

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population turnover, most notably the significant amount of “jail churn.”
State prison systems hold approximately 1.3 million people on any given
day, compared to 612,000 people held in local jails;35 however, six to nine
million individuals are sent to jail every year, compared to roughly 600,000
prison admissions.36 In the eyes of a prison-retail firm, the numerous
people entering or leaving jails, and the family members with whom they
communicate, add up to a broad and lucrative pool of captive customers.
Many facilities have a financial interest in prison retailing because they
receive consideration from vendors. Such consideration can come in the
form of a “site commission” (a predetermined percentage of sales revenue)
or other types of monetary or in-kind payments. Defenders of the prisonretail sector often attempt to justify vendors’ monopolist privileges by
arguing that prices are subject to market competition when facilities solicit
and evaluate bids.37 Although this theory is becoming increasingly dubious
in light of industry consolidation, it was never on strong ground to begin
with, because a facility’s interest in increasing its commission revenue
operates to drive end-user prices higher.
After conducting an extensive economic review of the inmate calling
service (“ICS”) industry as part of the Wright rulemaking, the FCC found
that competition in the procurement process did not result in competitive or
fair rates for end users.38 Shortly before the Commission revived its
previously moribund ICS rulemaking in 2012, a nationwide survey of
prison phone contracts found commission rates of up to 60%, with an
average nationwide rate of 42%.39 Based on a review of confidential carrier
financial data, the FCC determined that governments collected sitecommission revenue of over $460 million in 2013.40 In 2015, after years of
35. Id.
36. Id. at n.2 and accompanying text (discussing jail churn); U.S. Dept. of Justice,
supra note 31, tbl. 8.
37. See Reply Comments of Stephen A. Raher at 5, n.21, In the Matter of Rates for
Interstate Inmate Calling Services (2013), (No. 12-375), available at https://www.fcc.
gov/ecfs/filing/6017320127 (GTL, Securus, and CenturyLink presented this argument in the
FCC’s 2013 rulemaking).
38. Report and Order and Further Notice of Proposed Rulemaking [hereinafter “First
Report & Order”] at 14128-29, In the Matter of Rates for Interstate Inmate Calling Services,
¶ 40, 28 FCC Rcd. (2013) (No. 12-375) (“While the process of awarding contracts to provide
ICS may include competitive bidding, such competition in many instances benefits
correctional facilities, not necessarily ICS consumers—inmates and their family and friends
who pay the ICS rates, who are not parties to the agreements, and whose interest in just and
reasonable rates is not necessarily represented in bidding or negotiation.”).
39. John E. Dannenberg, Nationwide PLN Survey Examines Prison Phone Contracts,
Kickbacks, PRISON LEGAL NEWS, Apr. 2011, at 1-3.
40. Second Report and Order and Third Further Notice of Proposed Rulemaking
[hereinafter “Second Report & Order”] at 12821, In the Matter of Rates for Interstate Inmate
Calling Services, ¶ 122, 30 FCC Rcd. (2015) (No. 12-375).

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study, the FCC sought to rein in commissions by declaring that such
payments to facilities were not recoverable costs for purposes of ICS rate
setting.41 Although this regulation was eventually invalidated by an
appellate court, in the interim, the industry quickly discovered new ways of
providing valuable consideration to facilities without invoking the formal
label of a site commission.42 One trend in new compensation structures is
for a vendor to avoid commissions expressed as a percentage of sales, and
instead negotiate a fixed lump-sum or recurring payment to the facility
based on anticipated revenue.43 Securus’s 2016 financial statements
indicate that the company was obligated to make over $84 million in such
guaranteed payments to facilities over the following five years.44
As facilities explore new ways to profit from prison retailing, the
number and type of potential conflicts-of-interest has dramatically
increased. For example, when facilities receive commissions from an
electronic messaging system,45 they may boost commission revenue by
either banning postal mail46 or implementing policies that make mail
cumbersome and impractical.47 Or if a facility receives a commission from
41. Id. at 12819 (“After carefully considering the evidence in the record, we affirm our
previous finding that site commissions do not constitute a legitimate cost to the providers of
providing ICS.”).
42. Peter Wagner & Alexi Jones, On kickbacks and commissions in the prison and jail
phone market, PRISON POLICY INITIATIVE BLOG (Feb. 11, 2019), https://www.prison
policy.org/blog/2019/02/11/kickbacks-and-commissions/ (sub rosa commissions can be
labeled as a signing bonus, administrative fee, in-kind services rendered to the facility for no
cost, equipment rent, or contributions to electoral campaigns or professional associations).
43. See Pearson v. Hodgson, 2018 WL 6697682, No. 18-cv-11130-IT, (D. Mass. Dec.
20, 2018) (2011 contract between Securus and county jail provided 47% site commission,
but was amended in 2015 to replace commission with a flat $820,000 payment to county in
exchange for a four-year extension of the contract).
44. Securus Technologies Holdings, Inc. and Subsidiaries, “Consolidated Financial
Report: December 31, 2016” at 26 (RSM US, LLP, independent auditor) (Feb. 28, 2017) (on
file with author).
45. Stephen Raher, You’ve Got Mail: The Promise of Cyber Communication in Prisons
and the Need for Regulation, PRISON POL’Y INITIATIVE, at 11-12 (Jan. 2016), https://www.
prisonpolicy.org/messaging/report.html (discussing common commission structures).
46. See PRISON POL’Y INITIATIVE, Protecting Letters from Home, https://www.prison
policy.org/postcards/ (last visited Jan. 4, 2019) (Jails in at least thirteen states have banned
all incoming mail except for postcards).
47. Some facilities have striven to make mail slower and less personal by requiring all
incoming mail to be scanned and either reprinted or distributed electronically through
tablets), often citing dubious security concerns. See, e.g., Samantha Melamed, ‘I Feel
Hopeless’: Families Call New Pa. Prison Mail Policy Devastating, PITTSBURG POSTGAZETTE (Oct. 17, 2018), https://www.post-gazette.com/news/politics-state/2018/10/17/scipennsylvania-prison-mail-policy-families-devastating/stories/201810170130 (new policy of
scanning and reprinting incoming mail, based on allegations of drug smuggling, results in
“missing pages, misdirected letters, weekslong delays, and copies so poor as to be
illegible”); Katie Meyer, Pennsylvania Prison Officials Change Mail Handling after Drug-

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a tablet-based e-book program, it might prohibit books from being sent to
incarcerated people through the mail.48 Such conflicts will only become
more pronounced as the prevalence of prison retailing grows.
Vendors
The final component of any prison retail transaction is the company that
sells goods or services, and reaps the profits therefrom. Historically, these
firms were niche companies that focused on a particular product, such as
telephone service. These legacy companies have largely been absorbed by
and consolidated into conglomerates that sell a variety of products pursuant
to bundled contracts with facilities. Most of these new conglomerates (see
Table 1) are owned by private equity firms.49 This ownership structure is
not surprising given that prison-retail firms tend to have attributes that are
highly prized in the private-equity world. Specifically, prison retailers
enjoy high barriers to entry (long-term exclusive contracts with facilities,
high capital requirements in the form of network build-outs, and increasing
use of patents), dependable revenue streams (incarcerated customers and
their families will prioritize paying for essential items like phone calls or
basic hygiene items), and the potential for substantial revenue growth (as
facilities become more receptive to allowing new fee-based services, like
tablets). The following sections describe the basic contours of four major
Related Illnesses, NATIONAL PUBLIC RADIO (Sept. 5, 2018), https://www.npr.org/2018/09/
05/644973472/pennsylvania-prison-officials-ban-inmate-mail-in-response-to-drug-relatedillnes (discussing questionable evidence of drug-smuggling through the mail); Charlotte
County Jail Introduces Inmates to New Communication Tablets, WINK (Dec. 4, 2017),
https://www.winknews.com/2017/12/04/charlotte-county-jail-introduces-inmates-new-comm
unication-tablets/ (incoming mail to be scanned and distributed electronically on tablets).
48. Samantha Melamed, One Review of Pa. Prisons’ Pricey Ebooks: “Books That Are
Available For Free, That Nobody Wants Anyway,” PHILA. INQUIRER (Sept. 21, 2018),
http://www.philly.com/philly/news/pennsylvania-department-corrections-books-throughbars-philly-new-jim-crow-malcolm-x-20180921.html?__vfz=medium%3Dsharebar. The
Pennsylvania Department of Corrections receives a 30.5% commission on all e-book sales.
Contract Between Commw. of Penn. Dept. of Corr. and Global Tel*Link, Contract No.
AGR-346 [hereinafter “Pennsylvania-GTL Contract”], appx. D (Cost Matrix, revised Dec.
14, 2012) (on file with author).
49. There are a few publicly available data points that paint a rough picture of
Securus’s value. When Platinum Equity purchased Securus in 2017, it told regulators that it
had arranged a loan of “up to an aggregate principal amount of $2.6 billion” to fund the
transaction. See Letter to Connecticut Public Utilities Regulatory Authority from Raechel K.
Kummer (counsel for Abry) and Catrina C. Kohn (counsel for Platinum Equity), Dkt. No.
00-12-20 (Jun. 15, 2017) (on file with author) (one of several identical disclosures filed with
state public utility commissions concerning the Securus acquisition). In 2019, a Securus
executive testified that during that transaction, “the valuation of [Securus] . . . was north of a
billion dollars, but I don’t know by how much.” Transcript of Motions Hearing, at 1469:3-6,
U.S. v. Carter, No. 16-20032-JAR (D. Kan. Oct. 9, 2018), ECF 673.

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subsectors of prison retailing: telecommunications, commissary sales,
financial services, and computer tablets.
Table 1. Dominant Prison Retail Firms
Company

Products/Services

Global
Tel*Link/GTL

Telecom, tablets,
correctional banking

Securus
Technologies

Telecom, tablets
correctional banking

Trinity Services
Group

Commissary, telecom,
correctional banking

Union Supply
Group

Commissary

Subsidiaries (not
comprehensive)
TouchPay Holdings
(correctional banking)

JPay (correctional banking)
Satellite Tracking of People
(non-prison electronic
monitoring)
Cara Clinicals (electronic
health records)
Keefe Group (commissary)
ICSolutions (ICS)
Access Corrections
(correctional banking)
Unknown

Ownership
American Securities (purchased
GTL in 2011, from Veritas &
Goldman Sachs Direct, which
jointly owned the company for
two years).
Platinum Equity (purchased
Securus in 2017 from Abry
Partners, which acquired the
company from Castle Partners
in 2013).
H.I.G. Capital

Unknown

Telecommunications
Any discussion of prison retailing must begin with telecommunications,
given the comparatively long history of the ICS industry. Since the midtwentieth century ascendance of the public switched telephone network,
incarcerated people have typically had three options for communication:
letters, in-person visitation, and telephone calls.50 These different channels
have historically been insulated from naked rent-seeking. Postal rates are
set to cover the broad costs of the postal network with its universal service
mandate.51 In-person visiting often entails outlays of time and money on
the part of the visitor, but does not produce significant revenue for facilities
or private sector firms. Finally, telephone rates were, until comparatively
recently, set by state and federal agencies who oversaw the highly regulated

50. Stephen Raher, Phoning Home: Prison Telecommunications in a Deregulatory
Age, in 2 PRISON PRIVATIZATION: THE MANY FACETS OF A CONTROVERSIAL INDUSTRY 215,
219-220 (Byron E. Price & John C. Morris, eds., 2012).
51. Richard B. Kielbowicz, Preserving Universal Postal Service As A Communication
Safety Net: A Policy History and Proposal, 30 SETON HALL LEGIS. J. 383, 400-411 (2006).

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industry dominated by the Bell System and smaller independent operators.52
Phone pricing changed gradually but dramatically following the break-up of
the Bell System and the subsequent passage of the Telecommunications Act
of 1996, which led to a proliferation of new companies in the ICS space,
attracted by the prospects of high call volumes and unchecked rates.53
The contemporary ICS industry is dominated by two non-facilitiesbased telecommunications carriers that use VoIP-based platforms operating
on lines leased from local exchange carriers. These companies—Securus
and GTL—have collectively absorbed dozens of competitors since the
1990s.54 The FCC determined that Securus, GTL, and a third company,
Telmate, controlled 85% of the ICS telephone market (measured by
revenue) in 2013.55 In 2017, GTL acquired Telmate.56
Securus and GTL are aggressively pursuing new revenue sources, both
in terms of emerging telecommunications technology and non-telecom
businesses. As for the former category, so-called “video visitation” and
electronic messaging are the latest newcomers. Video visitation allows
incarcerated customers to communicate in real-time video with callers in
the free world. Although this technology holds great promise, in that it
allows for audio-visual communication across great distances, these
benefits have been overshadowed by high rates and the efforts of some
providers to couple video visitation with prohibitions on in-person
visiting.57 Electronic messaging allows for the exchange of written
messages (sometimes two-ways, other times only on an incoming basis) and
sometimes photographs—a service somewhat like email, but without many
of the technical features that free-world users have come to take for granted.
Like video visitation, electronic messaging is potentially beneficial
technology, but is known for high prices and unfair terms (such as stingy
character limits on messages).58

52. Raher, Supra note 50, at 217-218.
53. Id. at 218.
54. Peter Wagner & Alexi Jones, State of Phone Justice, PRISON POL’Y INITIATIVE
(Feb. 2019), https://www.prisonpolicy.org/phones/state_of_phone_justice.html (text and
graphic accompanying notes 20 and 21).
55. Second Report & Order, supra note 40 at ¶ 76.
56. Peter Wagner, Prison Phone Giant GTL Gets Bigger, Again, PRISON POL’Y
INITIATIVE BLOG (Aug. 28, 2017), https://www.prisonpolicy.org/blog/2017/08/28/merger/.
57. Bernadette Rabuy & Peter Wagner, Screening Out Family Time: The For-Profit
Video Visitation Industry in Prisons and Jails, PRISON POLICY INITIATIVE (Jan. 2015),
https://www.prisonpolicy.org/visitation/report.html.
58. Raher, supra note 45.

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Commissary
Commissaries generally make money by acting as the only authorized
vendor of items that are necessary for a minimally comfortable existence,
but which are not provided by prison facilities. Commissary inventories are
typically comprised of food (to supplement meager cafeteria meals),
healthcare items, hygiene products, letter-writing supplies, religious items,
and basic staples of everyday life like eating utensils, extension cords, and
cleaning supplies.
The size of the prison commissary industry is difficult to estimate, but
likely exceeds $1.6 billion in annual revenue.59 Average purchases per
customer vary widely across correctional facilities (due to different
regulations concerning allowable property and fluctuations in prices), but
are often $600 to $900 annually.60 While there are likely more commissary
operators in the field than telecommunications firms, there has still been a
wave of consolidation,61 with two companies dominating the commissary
market—Union Supply Group, Inc.62 and private-equity owned Keefe
Group. Unlike the ICS subsector, there seem to be a greater number of
small fringe competitors in the commissary space, perhaps because of lower
capital requirements.
Money Transmitters, Correctional Banking, and Release Cards
As previously discussed, incarcerated people rely largely on family
members for the funds necessary to purchase goods and services inside.
This structure has led to the proliferation of companies that profit from
facilitating such transfers. Money transfers come in two varieties: transfers
to inmate trust accounts, and direct payments for goods or services.
Inmate trust account is a term of art (specific terminology varies by
jurisdiction) describing a deposit account held by a governmental entity for
59. Stephen Raher, The Company Store: A Deeper Look at Prison Commissaries, n.3,
PRISON POL’Y INITIATIVE (May 2018), https://www.prisonpolicy.org/reports/commis
sary.html.
60. Id.
61. Stephen Raher, Paging Anti-trust Lawyers: Prison Commissary Giants Prepare to
Merge, PRISON POL’Y INITIATIVE BLOG (July 5, 2016), https://www.prisonpolicy.org/blog/
2016/07/05/commissary-merger/.
62. According to Union Supply Group’s website (https://www.unionsupply.com/), the
company was founded in 1991. The company thus appears to be unrelated to the similarly
named Union Supply Company, which was (ironically), a large company-store operator that
lasted well into the twentieth century, operating over 100 stores in the coal and coke
industries in the eastern U.S. John A. Enman, Coal Company Store Prices Questioned: A
Case Study of the Union Supply Company, 1905-1906, 41 PENN. HIST: A JOURNAL OF MIDATLANTIC STUDIES 52, 53-54 (1974)..

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the benefit of an incarcerated person.63
Historically, inmate trust
accounting has been a mundane subspecialty of government fiscal
administration: agencies collected funds in the possession of people who
come into custody, received deposits (i.e., wages earned during
incarceration or money orders sent by families), issued checks or money
orders for miscellaneous purchases, and ensured that account balances were
disbursed to the accountholder upon his or her release from custody. Now,
many agencies wish to outsource the management of such accounts, often
bundling the straightforward tasks of trust fund accounting with other
“correctional banking” services.
Traditionally, a family member would deposit funds to an trust account
by sending a money order to the facility. While this funding method
requires time for mailing, it has the benefit of allowing transferors to choose
among a variety of money-order issuers operating in a competitive market.64
Contractors that hold correctional banking contracts tend to steer transferors
away from low-cost money orders, in favor of an array of electronic or inperson payments, all of which carry high fees.65
As prison retailing opportunities grow, controlling access to the trust
account begins to look more like an essential facility. Incarcerated people
are increasingly expected to spend money on various goods and services.
But to engage in such transactions incarcerated customers often rely on
family members to transfer money into their trust account. Placing
63. See, e.g., Cal. Penal Code § 5008 (Dept. of Corrections and Rehabilitation
Secretary “shall deposit any funds of inmates in his or her possession in trust with the
Treasurer”); Tex. Gov’t Code Ann. § 501.014 (“The department shall take possession of all
money that an inmate has on the inmate’s person or that is received with the inmate when the
inmate arrives at a facility to be admitted to the custody of the department and all money the
inmate receives at the department during confinement and shall credit the money to an
account created for the inmate.”); see also N.Y. Correct. Law § 187(3) (statute establishes
trust accounting system, but only for wages earned).
64. See U.S. POSTAL SERV., OFC. OF INSPECTOR GENERAL, No. RARC-WP-16-007,
MODERNIZING THE POSTAL MONEY ORDER,8-10 (2016) (summarizing the market of moneyorder issuers).
65. Oddly, automated clearing house (“ACH”) transfer is the one common payment
channel that is hardly ever an option for trust-fund transfers. Given the strong security and
low costs associated with ACH transfers, the lack of an ACH option is surprising, although it
could be the result of vendors’ desire to avoid security-related investments that are required
of online ACH originators. See Nat’l Automated Clearinghouse Ass’n, Operating Rule §
2.5.17.4 (2018) (additional warranties required for online ACH origination). While vendors
that accept payment cards are likely expected, directly or indirectly, to comply with the
Payment Card Industry Data Security Standards, these rules are largely focused on
protecting confidential payment information in possession of a merchant, or during
transmission; see generally, “PCI Security Standards Council, Requirements and Security
Assessment
Procedures,”
ver.
3.2.1
(May
2018),
https://www.pcisecurity
standards.org/documents/PCI_DSS_v3-2-1.pdf. In contrast, ACH security requirements are
more focused on identity verification and fraud detection.

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exclusive access to trust account deposits in the hands of one firm
resembles a bottleneck monopoly,66 hurting both family members and
prison retailers who are not affiliated with the bottleneck provider.
The other common type of money transfer is a payment directly to a
vendor. These payments may be contemporaneous payments for goods or
services; but, companies are increasingly encouraging customers to prepay,
often subject to confusing and abusive terms of service.
While
prepayments are most common in the telecommunications subsector,
commissary companies have also begun experimenting with prepayment
options, possibly as a way to boost frequent small-dollar purchases of
digital content. Although Keefe Group prominently states that its prepaid
option is not the same as a trust-account deposit, Access Corrections does
not,67 leaving the possibility that some customers may use Access’s
prepayment option under the mistaken assumption that they are sending
money to a trust account.
The final financial transaction associated with a term of incarceration
comes when a facility owes money to a person upon his or her release.
Typically this money consists of the final balance of an inmate trust
account, although in the case of jails, it could simply be a refund of money
that the releasee had in their possession at the time of arrest. The “release
card” is a specialized payment product that has arisen to facilitate this type
of disbursement. Release cards are open loop prepaid debit cards (typically
branded as a MasterCard) which facilities use to make required payments to
people upon their release. While there is nothing per se impermissible
about making such payments via prepaid debit card, problems arise when
facilities are unwilling to cover the costs of such a system. Under most
release-card contracts, the correctional agency pays nothing and the card
issuer makes money by charging cardholders a panoply of exorbitant fees.68
Making matters worse, most facilities that utilize release cards do not give
people an option to receive release payments via a different method.
Correctional banking is big business. A rough extrapolation based on a
small dataset (from four states) suggests that the principal amount of fund
transfers to people in state prison systems could be around $1 billion a
year.69 Another indicator of the profits that can be extracted from
66. See generally James McAndrews, Antitrust Issues in Payment Systems:
Bottlenecks, Access, and Essential Facilities, FED. RESERVE BAN OF PHILADELPHIA: BUSINESS
REVIEW 3 (Sept. 1995).
67. See Union Supply Group Prepayment Ad, CALIFORNIAINMATEPACKAGE.COM,
http://www.californiainmatepackage.com (last visited Oct. 19, 2019).
68. Stephen Raher, Proposed Amendments To Regulation E: Curb Exploitation Of
People Released From Custody, PRISON POL’Y INITIATIVE (Mar. 18, 2015), https://static.
prisonpolicy.org/releasecards/CFPB-comment.pdf.
69. Stephen Raher, The multi-million dollar market of sending money to an

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correctional banking comes from Securus’s 2015 acquisition of JPay.
There is no public evidence of how much Securus paid, but a later
transaction provides a clue. When private equity firm Platinum Equity
acquired Securus in 2017, Securus disclosed its outstanding liability on an
earnout provision related to its purchase of JPay. Specifically, the
disclosure suggests that by 2017, Securus would likely owe JPay’s founder
and other original owners about $20 million under the earnout clause (of
course, this is on top of whatever money the founders received in 2015
when the sale actually closed).70
Tablets: The New Frontier
The newest products to gain traction in the prison retail market are
specialized computer tablets that provide communications, education, and
entertainment functions, typically operating on a closed wireless network,
but never with internet connectivity.71 Reviewers have found these tablets
to be the technological equivalent of already-obsolete early-model handheld
devices.72 But tablets promise to help correctional staff by managing
populations that suffer from chronic boredom.73 At the same time, the
devices help prison retailers dramatically expand revenue opportunities.
Some tablet programs, particularly in prison systems, provide tablets to
users for free, but most features and content can only be accessed for a
fee.74 Such fees tend to greatly exceed free-world prices, and there is no

incarcerated loved one, PRISON POL’Y INITIATIVE BLOG (Jan. 18, 2017), https://www.
prisonpolicy.org/blog/2017/01/18/money-transfer/.
70. Stock Purchase Agreement between Securus Investment Holdings, LLC, Connect
Acquisition Corp., and SCRS Acquisition Corp. § 6.3 (Apr. 29, 2017) (on file with author).
71. As a general rule, incarcerated people are entirely unable to access the internet,
either as a matter of agency policy or state law. See generally, Titia A. Holtz, Reaching out
from behind Bars: The Constitutionality of Laws Barring Prisoners from the Internet, 67
BROOK. L.REV. 855, 859-866 (2001-02) (surveying laws prohibiting internet access in
correctional facilities).
72. Jason Koebler, A Clear Plastic Tablet for Prisoners: The Motherboard Review,
VICE (Dec. 15, 2014), https://motherboard.vice.com/en_us/article/pgav3m/a-clear-plastictablet-for-prisoners-the-motherboard-review (“Technology in prisons is dismal, and the JP4
[JPay tablet] looks and feels like a Game Boy Advance. It’s clunky and it’s old and it’s not
at all that intuitive to use. But when your options are limited, I suppose you’ll take whatever
you can get.”).
73. Inspire Tablet Program Facility Benefits, GLOBAL TEL LINK, http://www.gtl.
net/wp-content/uploads/2018/05/GTL-Facility_Benifits.pdf. (Without citing any evidence,
GTL claims that its tablets produce “[s]ignificant decreases in inmate-on-inmate assaults,
inmate-on-officer assaults, and rule and behavior code violations.”)
74. See generally, Wanda Bertram & Peter Wagner, How to spot the hidden costs in a
‘no-cost’ tablet contract, PRISON POLICY INITIATIVE BLOG (July 24, 2018), https://www.
prisonpolicy.org/blog/2018/07/24/no-cost-contract/.

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obvious cost-based reason for such pricing. In facilities where tablets are
not provided for “free,” customers must either purchase a tablet (prices can
range from $40 to $160) or pay a rental fee that can range anywhere from
$5 to $150 per month.75
Prison tablet programs are nearly universal in their offering of video
games. No one has articulated the troublesome dynamic of encouraging
video-game usage among incarcerated populations more persuasively than
an unnamed resident of the Colorado Department of Corrections who told
Denver’s Westword newspaper:
The average prisoner will play games and music 8-10 hours a day, just
like any kid in America. Only they aren’t kids; they are men and women
who need rehabilitation and education. This buys a lot of safety for prison
staff, but what a waste of time for the prisoners. If they provided education,
it would be marvelous. Prisoners might just learn something useful and not
come back.76
There is also something unsettling about promoting a product that could
plausibly lead to addiction and dependency77 among a population with
disproportionate rates of substance abuse.78
Tablets do have potential to assist in educational programming, but
only if adequate resources are invested in content and instruction.
Technology by itself is not a solution. Although tablet providers are eager
to hype educational uses, evidence of actual effective, salient, and highquality content is lacking. To the extent that facilities are providing
educational technology without also investing in instructors and curriculum,
the educational potential will never be realized because unsupported
technology cannot effectively substitute for socially-mediated pedagogy.
75. See infra text accompanying note 108, tablet pricing varies widely by facility and
vendor. Some examples are: GTL’s $147 price tag for tablets in the Pennsylvania prison
system. See infra note 142, JPay’s tablet prices have been reported as ranging from $40 to
$160. See infra note 143, Union Supply Group sells a tablet for $159. As for rented tablets,
Securus’s website lists eighteen county jails and one state prison system that allow month-tomonth rentals, at prices ranging from $5 to $30 per month. SECURUS TECHNOLOGIES,
INC,Order the SecureView Tablet for your loved one, https://www.securustablet.
com/#/plans/start (last visited Dec. 2, 2018). See infra text accompanying note 117, the jail
in Knox County, Tennessee, rents tablets for $4.99 per day, which can result in a monthly
rate of approximately $150.
76. Alan Prendergast, Colorado prisoners getting ‘free’ electronic tablets—with a
catch, WESTWORD (Feb. 15, 2017), http://www.westword.com/news/colorado-prisonersgetting-free-electronic-tablets-with-a-catch-8795689.
77. Management of Substance Abuse: Gaming Behaviour, WORLD HEALTH ORG. (Sept.
2018), http://www.who.int/substance_abuse/activities/gaming_disorders/en/.
78. U.S. DEP’T. OF JUST., BUREAU OF JUSTICE STATISTICS 2017-2009, Drug Use,
Dependence, and Abuse Among State Prisoners and Jail Inmates (Jun. 2017) (58% and 63%
of residents of state prisons and jails, respectively, meet diagnostic criteria for drug
dependence or abuse, compared to 5% of the general population).

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To illustrate the confusion about educational offerings, one need only
visit JPay’s main webpage for family members, which includes a prominent
banner ad touting the educational promise of its JP5 tablet. Following the
link, however, reveals that the tablet only provides access to an educational
platform; content and instruction are apparently the responsibilities of
others.79 Following yet another link brings the user to the webpage for
JPay’s education program, which features stock images of graduation
ceremonies, an emotionally manipulative video advertisement, vague
statements about innovation and “leading-edge technology,” but absolutely
no discussion of how facilities have obtained content and instruction, which
facilities use the platform, or whether anyone has documented outcomes.80
The versatility of tablets is both their major selling point and a
wellspring of potential conflicts of interest. When a facility stands to
financially profit from tablet usage, the opportunities for mischief are
numerous: in-person visits can be prohibited in favor of video visitation;81
prison libraries or donated books can be cut off and replaced with e-books
for purchase; postal mail can be restricted in order to increase electronic
messaging usage;82 and educational programs can be curtailed to redirect
students to online-only courses.83
Unfair Industry Practices
Prison retailing is not only built on a generally inequitable business
premise, but current industry leaders also use specific practices that are
unfair, deceptive, or abusive. Some problems (such as price gouging) are a
direct result of vendors’ unchecked monopoly powers, while other issues
(such as oppressive contract terms) are similar to problems commonly
confronted by consumers in other settings. Prison retailers employ some
practices that are potentially unlawful, while others are unseemly but legal.
79. Education, JPAY, INC., https://www.jpay.com/education.aspx (last visited Nov. 27,
2018).
80. Id.
81. Matt Lakin, Point, Click, But No Touch: Debate Shapes up over Video Visitation at
Knox Jail, (Nov. 24, 2018), KNOXVILLE NEWS SENTINEL, https://www.knoxnews.com/stor
y/news/crime/2018/11/25/jail-video-visitation-knox-county-face-face/2027042002/ (county
jail received $79,000 over four years in commissions from video visitation after prohibiting
in-person visits); Steve Horn & Iris Wagner, Washington State: Jail Phone Rates Increase as
Video Replaces In-person Visits, PRISON LEGAL NEWS, Oct. 2018), at 1.
82. PRISON POL’Y INITATIVE, supra notes 46 and 47.
83. Although the author did not find any documented cases of online fee-based courses
replacing in-person instruction, as a general matter, total prison spending on education
decreased on a nationwide basis by 6% between 2009 and 2012. Lois M. Davis, et al.,
Correctional Education in the United States: How Effective Is it, and How Can We Move the
Field Forward, RAND CORP. (2014), at 3.

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It can sometimes be difficult, however, to pin down company practices due
to the pervasive lack of transparency that characterizes the entire
correctional sector.84 Bureaucratic hostility to transparency can result in
information asymmetry that causes some consumers to spend money
without fully understanding the terms of the transaction. Others who do
understand the vendor’s terms are nonetheless unable to avoid them.
Of the unfair practices that are publicly known, most are highly
structured and clearly intentional, bespeaking corporate cultures
dominated by greed. When plaintiffs challenging ICS rates and practices
in Illinois referenced the greed of the industry, Circuit Judge Richard
Posner dismissed the characterization by remarking that the prison system
is “said to be motivated by greed, but greed that is institutional rather than
personal. Far from being mere agents of the phone companies, the prisons
are in the driver’s seat, because it is they who control access to the
literally captive market constituted by the inmates.”85 On the one hand,
Posner is correct in pointing out the power exercised by correctional
agencies, and his framing of the issue seems to be a defense of public
budgeting decisions—a normative matter that many would agree is
subject to judicial review only for the limited purpose of ensuring
compliance with applicable constitutional or statutory requirements.
Nonetheless, this pat formulation ignores the very real greed on the part of
private equity companies that have built a business model based on using
the coercive power of the state to extract revenue from poor people in the
form of exorbitant prices for phone calls or junk food.86 Of course, greed
is not necessarily illegal. It can, however, motivate companies to use
particular practices that are unlawful. This section discusses common
84. John Gibbons & Nicholas Katzenbach (co-chairs), Confronting Confinement: A
Report of the Commission on Safety & Abuse in America’s Prisons, Vera Institute of Justice
(June 2006), at 102. (“The prevailing view of correctional facilities as shrouded and
unknowable reflects the shortage of meaningful and reliable data about health and safety,
violence and victimization; ignorance about what information is available; and the difficulty
of accessing and interpreting much of the data that corrections departments collect but do not
widely disseminate or explain.”).
85. Arsberry v. Illinois, 244 F.3d 558, 566 (7th Cir. 2001).
86. See Raher, infra note 174, at 13. It is difficult to overstate the disadvantage that the
public has in not being able to gain a clear picture of vendor finances. Securus, for example,
markets itself to facilities as a “partner” that puts facilities ahead of its own profits, as
supposedly evidenced by Securus’s below-market EBITDA. While Securus’s healthy
EBITDA ratio of 27.9% may be lower than some publicly traded telecommunications
carriers, Securus’s audited financial statements provide no detail on how much the company
pays to its parent, Platinum Equity, in monitoring fees. This is a critical piece of
information, since monitoring fees can be substantial, and are arguably equity dividends
disguised as expenses. See Eileen Appelbaum & Rosemary Batt, Fees, Fees, and More
Fees: How Private Equity Abuses Its Limited Partners and U.S. Taxpayers, CTR. FOR ECON.
& POL’Y RESEARCH (May 2016), at 26-29.

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types of unfair practices, while the subsequent section explores potential
legal remedies.
Masquerading as Cream: Inflated Prices and
Inefficient Payment Systems
Things are seldom what they seem
Skim milk masquerades as cream
—H.M.S. Pinnafore, act II, scene 187
The leading complaints from prison-retail customers focus on high
prices and payment mechanisms that are inefficient, confusing, or otherwise
unfair. Although prison retailers are likely to make vague claims of
security in response to such complaints, these arguments often do not hold
up under scrutiny and it is difficult to see prison-retail prices as anything
other than premium rates charged for inexpensive, run-of-the mill goods or
services. Moreover, while vendors are quick to point out security features
which add to their costs, they conveniently gloss over expenses incurred by
free-world retailers that are inapplicable in a prison setting (such as
advertising and operating a brick-and-mortar retail network).
The factual record concerning ICS prices is particularly robust thanks to
the multiyear rulemaking conducted by the FCC. The Commission’s
involvement with the industry dates back to 1993, when ICS carriers asked
the FCC to deregulate payphone rates in correctional facilities. The FCC
ultimately granted the request mere days before the entire
telecommunications industry changed with the enactment of the
Telecommunications Act of 1996.88 As part of Congress’s sweeping
reorganization of wireline phone service, section 276 of the 1996 Act
directed the FCC to ensure that payphone operators were “fairly
compensated,” while also classifying all “inmate telephone service in
correctional institutions” as per se “payphone service.”89 Armed with this
provision, ICS carriers quickly took aim at a handful of states that had set
caps on intrastate calling rates in prisons and jails. In 1996, a coalition of
ICS carriers petitioned the FCC to preempt state regulation of intrastate ICS
rates, citing the newly enacted § 276, but the FCC declined the request.90
The next major move regarding ICS regulation came when incarcerated
people and their families went on the offensive, filing the landmark Wright

87.
88.
89.
90.

W.S. Gilbert, H.M.S. Pinafore, or The Lass That Loved A Sailor (1878).
110 Stat. 56 (1996); Raher, supra note 50, at 231.
47 U.S.C. § 276(b)(1)(1996); 47 U.S.C. § 276(d)(1996)
Raher, supra note 50, at 232-233.

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class action.91 After months of motion practice, the district court referred
the matter to the FCC under the doctrine of primary jurisdiction,92 but the
Commission waited nearly ten years before commencing a rulemaking
proceeding.93
In 2015, when the FCC issued interim rate caps on ICS calls, it required
carriers to submit detailed accounting data itemizing the functional
expenses of providing service to incarcerated customers.94 At the outset of
the Wright rulemaking, the Commission had discovered rates ranging up to
$1.15 per minute.95 Upon reviewing the expense data collected under the
interim rule, the FCC concluded in 2015 that permanent rate caps of 11¢
per minute would allow ICS providers to cover their costs and be fairly
compensated.96 The final 2015 rules also allowed carriers to charge some
ancillary fees in addition to the per-minute rate, but the type and amount of
such fees were strictly limited, in an effort to restrain the carriers’ “ability
and incentive to continue to increase such charges unchecked by
competitive forces.”97 Importantly, even though the rate caps lowered the
per-minute revenues collected by carriers, the new rates allowed customers
to place more calls, thereby offsetting lower per-call profit margins. In
mid-2015, Securus told potential investors in a private briefing that the
interim caps had “neutral to . . . modestly positive EBITDA impact
including some positive elasticity of demand,” and the company expected
the same result under the yet-to-be-issued final rate caps.98
Once the FCC signaled its intent to regulate calling rates, ICS carriers
focused on identifying new unregulated sources of revenue.99 New
communications channels and computer tablets offer carriers numerous
opportunities to charge inflated prices and collect the resulting profits.
91. See Complaint, supra note 15, Lecher, supra note 16, and supra note 17.
92. Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Aug. 22, 2001), ECF No.
94 (order dismissing case under the doctrine of primary jurisdiction); ECF No. 105 (order
modifying order of dismissal, and staying case pending FCC rulemaking).
93. Rates for Interstate Inmate Calling Services, 78 Fed. Reg. 4369 (Jan. 22, 2013) (to
be codified at 47 C.F.R. pt. 64).
94. First Report & Order, supra note 38, at 6 ¶ 124-126 and 28 FCC Rcd. at 14171-72.
95. Id. at ¶ 35 and 28 FCC Rec. at 14126. (not sure how to cite these two sources).
96. Second Report & Order, supra note 40, at ¶ 58 and 30 FCC Rcd. at 12792 (The
FCC imposed an 11¢-per-minute rate cap on calls from prisons, while using a three-tiered
system of higher per-minute rates for calls from jails (varying based on facility population).
In justifying the rate caps, the FCC stated that even the lowest rate cap of 11¢ “is greater
than the average per minute cost of each of the more efficient reporting providers.”).
97. Id. at 12838-40.
98. SECURUS TECHNOLOGIES, INC., “Public Lender Presentation” at 25 (Apr. 15, 2015),
published as appx. 1 to Comments of Prison Policy Initiative, In the Matter of Rates for
Interstate Inmate Calling Services, WC Docket No. 12-375 (Mar. 10, 2016), available at
https://www.fcc.gov/ecfs/filing/60001498735.
99. Kearney & Merrill, see infra note 245.

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Electronic messaging systems, for example, charge from 5¢ to $1.25 per
message, with most facilities setting rates around 50¢.100 Messages sent on
these systems are text-only, and are subject to character limits, ranging from
1,500 to 6,000 characters.101 Some systems allow family members to attach
photos or videos, or send e-cards, but these features inevitably cost extra.
Why should a plain-text message cost 50¢ per message when email is free
to practically everyone outside of prison? Vendors typically argue that
there are costs to running the system. Setting aside the question of whether
these costs should be borne by correctional systems instead of families,
there is no compelling evidence to suggest that end-user prices are
reasonably related to vendor costs. Messaging prices typically hover
around the cost of a first-class postage stamp (JPay even goes so far as to
denominate its prices in numbers of “stamps”),102 yet postal rates are set to
cover the costs of a universal system of delivering mail to every address in
the country—an expense structure totally unrelated to the cost of running a
closed proprietary text messaging platform.103
Inflated prices are also evident in sales of electronic music and books.
Under a 2016 contract with the Colorado Department of Corrections (since
cancelled), GTL was allowed to charge up to $19.99 per month for a digital
music subscription.104 This price, which is twice the rate for free-world
services like Spotify or Google Play, is difficult to justify when one
considers that GTL’s music catalog appears to be about one-tenth the size
of Spotify or Apple.105 In 2014, the Pennsylvania Department of
Corrections awarded a contract to GTL to operate a tablet program,
including an e-book feature. After the program started, the Department
attempted to prohibit people from receiving purchased or donated books
from any other source.106 Although the book ban was quickly repealed,107
the e-book program is still in place, with prices that consistently exceed

100. Raher, supra note 45, at 13-14.
101. Id. at 20.
102. JPay, Electronic Message Pricing of Arkansas Correctional Facility of Colorado
State Prison System, https://www.jpay.com/Facility-Details/Colorado-State-Prison-System/
Arkansas-Valley-Correctional-Facility.aspx (last visited Oct. 19, 2019).
103. Id. at 14-15.
104. See generally, Stephen Raher, The Wireless Prison: How Colorado’s Tablet
Computer Program Misses Opportunity and Monetizes the Poor, PRISON POL’Y INITIATIVE
BLOG (JUL. 6, 2017), https://www.prisonpolicy.org/blog/2017/07/06/tablets/.
105. Id.
106. Wanda Bertram, Philadelphia Inquirer exposes Pennsylvania’s complicity in
cutting off incarcerated people’s access to books, PRISON POL’Y INITIATIVE BLOG (SEPT. 21,
2018), https://www.prisonpolicy.org/blog/2018/09/21/pennsylvania-ebooks/.
107. Samantha Malamed, Under Pressure, Pa. Prisons Repeal Restrictive Book Policy,
PHILA. INQUIRER (Nov. 2, 2018), http://www.philly.com/philly/news/pennsylvania-bookban-doc-books-through-bars-wetzel-20181102.html.

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free-world prices by a wide margin. The Pennsylvania program does not
provide free tablets, so a customer must first purchase a tablet for $147 plus
tax.108 After that substantial outlay, the customer must still purchase ebooks from a list of roughly 8,800 titles.109 An analysis of fifty randomly
selected titles indicates that GTL charges $3 to $6 for public-domain titles
that are available for free as Kindle e-books on Amazon.com; remaining
titles are priced at an average rate of 130% over the Kindle price.110
Finally, fees charged for sending money to a trust account are reliably
high, without any readily apparent cost-based justification. Neither Access
Corrections nor TouchPay (owned by GTL) publish their fees, but JPay
routinely charges fees that equate to 20%-35% for smaller deposits.111
When a plaintiff incarcerated in Kansas challenged deposit fees, that state’s
supreme court noted that the plaintiff’s mother incurred monthly fees of
$11.40 to deposit $45 into his trust account (a 25% markup).112
Non-cost-based pricing also appears in the form of “premium” add-ons.
For example, Securus charges one “stamp” to send a text-only electronic
message.113 Before sending a message, a family member must decide
whether to prepay (one additional stamp) for their loved-one’s reply—if no
reply is sent, then this additional amount is simply wasted. The family
member may also attach up to five photographs, for an additional stamp.
Assuming Securus is economically rational, the typical 50¢ base price for a
text-only message would be adequate to cover the overhead of operating the
electronic messaging network. Thus, the marginal cost of adding photos to
a message would consist of the additional storage capacity necessary to
hold the additional files. Assuming that a customer attaches the maximum
five photographs, at the maximum allowed size (3 megabytes per photo),
108. PENN. DEPT. OF CORR., Tablets, https://www.cor.pa.gov/Inmates/Pages/
Tablets.aspx (last visited Nov. 29, 2018).
109. PENN. DEPT. OF CORR., GTL E-book Availability List, https://www.cor.pa.gov/
Inmates/Documents/master-ebook-list.pdf (last visited Nov. 29, 2018).
110. Using a randomized process, the author selected fifty titles from the GTL e-book
list and searched for Kindle versions on Amazon.com. Four titles were discarded from the
sample because they were not available on Amazon, and an additional title was discarded
because it existed in multiple editions. Of the forty-five titles that are available from both
sources, eight are public domain works which are available for free on Amazon, but for
which GTL charges $2.99 (three titles) or $5.99 (four titles). The remaining thirty-seven
works were available for an average price of $9.40 from Amazon versus an average of
$17.15 from GTL. GTL’s prices exceeded Amazon’s by an average of 130%, ranging from
a low premium of 30% ($20.99 for a book sold on Amazon for $15.99) to a high of 808%
($8.99 for a book sold on Amazon for 99¢).
111. See Typical JPay Fee Schedule, Eastern Or. Correctional Institution of Or. Dept.
of Corrections, https://www.jpay.com/PAvail.aspx (last visited Oct. 19, 2019).
112. Matson v. Kan. Dept. of Corr., 301 Kan. 654, 659-60 (2015).
113. SECURUS TECHNOLOGIES, eMessaging, https://securustech.net/emessaging (last
visited Jan. 3, 2019).

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this would require Securus to store 15 megabytes of data, which entails
storage costs of less than one-tenth of a cent.114 Even if one were to add
some additional amount to allow Securus to recoup the cost of developing
or licensing the software to receive and transmit such digital files, it is hard
to imagine a situation where such recovery would justify charging 50¢ to
send five digital photos. But in facilities that have implemented mandatory
mail-scanning policies,115 such electronic systems are the only practical way
for family members to share pictures with their loved ones.
Sometimes vendors are able to charge customers premium prices for the
privilege of avoiding problems that are created by the vendor itself. For
example, Securus provides video visitation and electronic messaging in the
Knox County, Tennessee jail, but customers often complain about having to
wait in line for a fifteen minute session at a kiosk in a crowded unit. To
avoid the hassle and lack of privacy that comes with using a shared kiosk,
customers can access the same features on an individual tablet, for which
they must pay $4.99 per day plus regular messaging fees.116
In addition to prices that are unjustly high, consumers are also
confronted by confusing or inefficient payment options which can hinder
informed decision-making. To begin, the number of potential payment
options can be bewildering, because vendors often encourage customers to
make advance payments for specific types of services. But even if one
vendor operates a facility’s phone system and electronic messaging system,
prepayment for one type of communication often cannot be later redirected
to a different service offered by the same vendor. For example, depending
on the type of service someone is seeking to purchase, a relative of someone
in the Colorado prison system must choose between five different payment
options, which differ in terms of transaction fees and refund provisions (see
Figure 1).
Even if a consumer can decipher payment options, the associated terms
can make it nearly impossible to determine what payment method is the
most economically rational. To the extent that processing fees are high, one
might assume that making fewer prepayments in larger amounts is the most
rational course. But this type of prepayment can be disadvantageous when
114. Andy Klein, Hard Drive Cost Per Gigabyte, Backblaze (July 11, 2017), Pricing
information was obtained from Andy Klein, “Hard Drive Cost Per Gigabyte,”
https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/. Pricing from Seagate of
$49.99 for a 1 terabyte drive, yielding a cost of 5¢ per gigabyte. Given the maximum
attachment size of 15 MB (or 0.015 GB), Securus’s approximate marginal cost is calculated
as follows: 5¢ x 0.015GB = 0.075¢.https://www.backblaze.com/blog/hard-drive-cost-pergigabyte/
115. See supra note 47.
116. Lakin, supra note 81.

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vendor terms and conditions provide for forfeiture of prepaid amounts in
various situations. For example, Securus—like all electronic messaging
providers—requires prepayment for messages.
Not only are such
prepayments non-refundable, but they also expire 180 days after the date of
purchase.117 Given that people in prison can lose access to electronic
messaging as a disciplinary measure, it is not hard to imagine situations
where family members could prepay for a large quantity of electronic
messages, only to lose the money when their relative is subject to
disciplinary sanctions. Securus allows refunds for video visitation sessions
in some limited circumstances, but the refund is only issued in the form of
an account credit, which itself expires after 90 days.118 Anecdotal evidence
also indicates that prepayment forfeiture can be a problem when a
correctional facility changes ICS carriers without a provision for transfer of
prepaid balances.
Prison-retail vendors price their products as if they are selling cream,
when in fact they are trafficking in skim milk. In normal markets, such
behavior is mitigated by competition and consumer choice, but not so inside
prison walls.
What Law Applies?
When evaluating the rights and remedies of a party to a commercial
transaction, the first task is to determine what law applies. In the case of
prison retailing, this poses some unique challenges, beginning with
incarcerated people’s pervasive lack of access to even basic transactional
information. To the extent that a contract is exclusively available on the
internet, an incarcerated customer is simply unable to access the document;
on the other hand, if the customer agrees to “browser wrap” terms and
conditions displayed on a kiosk or tablet, she may well be unable to save,
study, or share this text with a friend or advisor, for lack of email or a
printer. Prison-retail customers also face challenges that are common to
many consumers in non-prison settings, such as dense terms written in
impossibly small print. In fact, when formerly incarcerated people in
Georgia filed a class action complaint challenging the legality of release
cards, the court declined to rule on the enforceability of the cardholder
agreement until the card-issuer filed a reformatted version in typeface that
was large enough for the court to read.119
117. SECURUS TECHNOLOGIES, INC., Friends and Family Terms and Conditions, (last
visited Nov. 30, 2018) [http://www.webcitation.org/74KHOK53W] (hereinafter “Securus
T&C) (Emessaging Terms §§6 and 9).
118. Id.
119. See generally, Regan v. Stored Value Cards, No. 14-cv-1187-AT, (N.D. Ga. May
29, 2014) (order directing defendants to file a reformatted or retyped version of the

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Once a customer determines the terms of the contract governing a
purchase, the next analytical step is to compare the provisions of the
consumer-facing contract to the terms of the contract between the vendor
and the correctional facility. The facility-vendor contract often contains
more detail and is typically a negotiated agreement, in contrast to the
adhesive terms presented to end users on a take-it-or-leave-it basis. In a
typical telecommunications contract, for example, Securus warrants to a
county jail that its delivery of video visitation service will be performed in a
good and workmanlike manner.120 In sharp contrast, family members
signing up to use the same service are required to assent to terms and
conditions that purport to disclaim all warranties, express, implied, or
statutory.121 Because end-users are not parties to the facility-vendor
contracts, these contracts cannot enlarge or diminish consumers’ rights.122
There is a possibility that unreasonable discrepancies between a vendorfacility contract and an end-user contract could form the basis for a UDAP
claim, to the extent that vendors have won monopoly contracts based on
certain representations or warranties that are ultimately rendered illusory as
far as the end-user is concerned, due to exculpatory provisions in consumerfacing contracts.
Finally, in the telecommunications context, it is important to determine
whether a given service is covered by a publicly-filed tariff. Not only do
tariffs provide important information about terms of service, but a true tariff
may implicate the filed-rate doctrine. This doctrine “is a court-created rule
to bar suits against regulated utilities involving allegations concerning the
reasonableness” of rates contained in a filed tariff.123 Although some courts
have dismissed ICS litigation under the filed-rate doctrine, it does not
insulate carriers from every type of claim. For example, a retroactive claim

cardholder agreement in 13-point font).
120. E.g., Master Services Agreement between Securus Technologies, Inc. and Fort
Bend County (Texas) (dated Feb. 6, 2018), Exh. C. at 16 (on file with author) (“[Securus]
warrants that the services it provides as contemplated by this Schedule [including video
visitation] will be performed in a good and workmanlike manner consistent with industry
standards and practices.”).
121. Securus T&C, supra note 117, General Terms § 8(A) (service “is provided on an
‘as is’ and ‘as available’ basis. Securus and its suppliers, licensors, and other related parties,
and their respective officers, agents, representatives, and employees expressly disclaim all
warranties of any kind, whether express, statutory or implied, including, but not limited to,
the implied warranties of merchantability, fitness for a particular purpose, title, accuracy of
data and non-infringement” (emphasis deleted)).
122. See Restatement (Second) of Contracts § 313 (1981). Not only do vendor-facility
contracts invariably contain express disclaimers of third-party beneficiaries, but common
law doctrine is particularly hostile to third-party beneficiary status in the context of
government contracts.
123. 64 AM. JUR. 2D Public Utilities § 62 (2011).

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for money damages is likely to fail, but a claim for injunctive relief may
well survive a motion to dismiss.124 Even though the doctrine is usually
invoked defensively by carriers, the possibility remains that ICS users may
sometimes be able to use the doctrine offensively. Because website terms
and conditions are so exculpatory, a tariff reviewed and approved by a
regulatory may well provide greater customer relief by, for example,
allowing claims based on the carrier’s gross negligence, willful neglect, or
willful misconduct. Under the filed-rate doctrine, the terms in the tariff
would be binding, because a carrier cannot “employ or enforce any
classifications, regulations, or practices . . . except as specified in [a filed
tariff].”125
The larger problem with application of the filed-rate doctrine to ICS
litigation is that the basic rationale for the doctrine has largely disappeared,
particularly at the federal level. The doctrine is grounded in judicial
deference to the regulatory rate-setting process. But as jurisdictions
increasingly deregulate telecommunications rates, tariffs are often not
reviewed and approved by public utility commissions. On the federal level,
tariffs for any type of interstate phone service (in- or outside of prison) are
no longer required under FCC rule.126 Instead, non-dominant carriers like
ICS companies must publicly disclose rates and terms (confusingly, some
providers comply with this obligation by posting a document that they refer
to as a “tariff” even though it is governed by the FCC’s detariffing order).127
The posting of rates is meant to allow consumers to make informed
choices—a concept that is has no relevance in the world of monopoly ICS
contracts. When issuing its detariffing rule, the FCC concluded that
elimination of tariffs would “eliminat[e] the ability of carriers to invoke the

124. The most informative judicial opinion on the filed-rate doctrine as applied to ICS
carriers is Arsberry v. Illinois, 244 F.3d 558 (7th Cir. 2001), in which plaintiffs brought
claims under § 1983 and the Sherman Antitrust Act, concerning ICS rates and procurement.
Citing the filed-rate doctrine, the district court dismissed all claims. Writing for a
unanimous panel, Judge Posner found that the Sherman Act claims should not have been
dismissed under the filed-rate doctrine, but that they were nonetheless properly dismissed on
the merits. Id. at 563 (“If the plaintiffs in this case wanted to get a rate change, the . . .
[filed-rate] doctrine . . . would kick in; but they do not, so it does not. Eventually they want
a different rate, of course, but at present all they are seeking is to clear the decks—to
dissolve an arrangement that is preventing the telephone company defendants from
competing to file tariffs more advantageous to the inmates.”). See also, Daleure v. Kentucky
119 F. Supp.2d 683, 690 (W.D. Ky. 2000) (dismissing plaintiffs’ damages claims against
ICS carriers under the filed-rate doctrine, but allowing claims for injunctive relief under the
Sherman Act to proceed)
125. Am. Tel. & Tel. Co. v. Central Ofc. Tel., 524 U.S. 214, 221-222 (1998).
126. Second Report and Order, In the Matter of Policy & Rules Concerning the
Interstate, Interexchange Marketplace, supra note 40, at 20730.
127. Id. at 20776.

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‘filed-rate’ doctrine,”128 but some have argued that the FCC lacks the
authority to abolish this judicially-created rule.129 The resulting confusion
has led some courts to apply the doctrine to ICS rate challenges, even
though such rates have long been detariffed at the federal level.130 At the
state level, when the prospect of robust regulation threatens to erode profits,
ICS carriers have been known to strategically detariff services in order to
escape regulatory jurisdiction,131 although such efforts are not always
successful.132 Accordingly, it is only fair to provide reciprocal treatment for
ratepayers, by eliminating the filed-rate doctrine for detariffed services.
Terms of Service: Carrying a Bad Joke Too Far133
As alluded to in the previous section, terms and conditions thrust onto
prison-retail consumers are unfairly one-sided. While contracts of adhesion
have become commonplace in all types of consumer transactions, the
extremity of some prison-retail terms raise questions about what, if
anything, a customer is actually purchasing. The terms for Securus’s video
visitation product begin with a cheerful declaration that the service “allows
users to avoid the time, expense and hassle of travelling to and from a
correctional facility,” but a subsequent provision specifies that “Securus
makes no representations or guarantees about the ability of the service to

128. Id. at 20762.
129. CHARLES H. HELEIN, JONATHAN S. MARASHLIAN, & LOUBNA W. HADDAD,
Detariffing and the Death of the Filed Tariff Doctrine: Deregulating in the “Self” Interest,
54 FED. COMM. L.J. 281 (2002).
130. E.g., Daleure v. Kentucky, 119 F. Supp.2d 683, 686 (W.D. Ky. 2000) (applying
the filed-rate doctrine upon finding “State and federal regulatory agencies approved all of
the . . . rates” challenged in the complaint (emphasis added)). In contrast, the correct result
was reached in Antoon v. Sercurus Tech., No. 5:17-cv-5008, 2017 WL 2124466 (W.D. Ark.
May 15, 2017), where the court denied a motion to dismiss under filed-rate doctrine because
Securus utilizes VoIP technology and the Arkansas Public Service Commission lacks
jurisdiction over VoIP services or provider.
131. See Complaint, Pearson v. Hodgson, No. 18-cv-11130-IT, at ¶¶ 47-49 (D. Mass.
May 30, 2018), ECF No. 1-1 (when Massachusetts Dept. of Telecommunications & Cable
imposed intrastate ICS rate caps, Securus withdrew its tariff and charged rates in excess of
the new caps, alleging that its service is delivered via VoIP and therefore exempt from state
regulation under Mass. Gen. Laws ch. 25C, § 6A).
132. See In re Securus Tech., Order Denying Withdrawal of Tariff, Dkt. No. TF-20170041 (Iowa Utils. Bd., Feb. 9, 2018) (denying Securus’s motion to withdraw its tariff
because, even though the company was no longer a “telephone utility” under state law, it
was still an “alternative operator service company,” which is required to file a tariff under
state law (see Iowa Code Ann. § 476.91).
133. Peter Alces & Jason Hopkins, Carrying A Good Joke Too Far, 83 CHICAGO-KENT
L. REV. 879 (2008) (borrowing the title of this section from the law review masterful
analysis of U.C.C. § 4-103(a)).

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work properly, completely, or at all.”134 All fees are “pre-paid and nonrefundable,” but Securus will, in “limited situations,” consider issuing a
discretionary refund, although it will not issue refunds “for disconnects
initiated by the correctional facility, or disconnects due to Internet
connection or hardware malfunctions.”135 Indeed, the same policy states
that discretionary refunds will only be issued in situations where “Securus
cancels a paid Video Visitation session before the session begins,”136 which
indicates that the company’s policy is to never issue a refund for a
disconnected session, even if the disconnect was caused by a failure of
Securus’s own network.
Unsurprisingly, mandatory arbitration provisions and class-action
prohibitions are ubiquitous in prison retail terms. GTL includes a broad
arbitration and class-action ban in its terms, although it fails to identify an
arbitral forum,137 thus raising questions about enforceability. JPay
publishes separate terms and conditions for its various services and
products, all of which provide for mandatory arbitration before JAMS.138
Although prison retailers are not always successful in enforcing arbitration
agreements, the industry (like others) presumably learns from its missteps
and engages in ongoing efforts to fashion more ironclad contractual
provisions.139 The major failure in terms of arbitration provisions has been
release cards, because courts have largely found that cardholders were
given no other way to obtain their money, and therefore any agreement to
arbitrate was not voluntary.140
As computer tablets and their hefty price tags become more prevalent
inside correctional facilities, so too does the relevance of consumer
warranty law. Prison retailers’ end-user terms and conditions governing the
sales of goods are replete with questionable provisions. The most
noticeable problem is the appallingly short warranty periods covering

134. Securus T&C, supra note 117, Prod. Terms & Conditions § 6 and Gen’l Terms &
Conditions § 9.
135. Id., Prod. Terms & Conditions § 6.
136. Id.
137. Global Tel*Link Corp., Terms & Conditions § R. (dated Mar. 30, 2015),
http://www.gtl.net/wp-content/uploads/2015/04/GTL%20NET%20Terms%20of%20Use%
2003-30-2015.pdf.
138. E.g., JPay, Inc., Payments Terms of Service § 15 (accessed Dec. 6, 2018)
https://www.jpay.com/LegalAgreementsOut.aspx.
139. James v. Global Tel*Link Corp, et al., No. 13-4989, 2016 WL 589676, 4-7 (2016)
(GTL lost a motion to compel arbitration as to most of the named plaintiffs in a New Jersey
class action because most of the plaintiffs had created their accounts through GTL’s
automated interactive voice recognition system, and had not taken any affirmative steps to
demonstrate acceptance of the arbitration provision.).
140. See Reichart v. Keefe Comissary Netowrk, infra notes 314 and infra note 315.

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expensive computer tablets. JPay tablets can cost up to $160,141 but the
devices are “not warranted to operate without failure” and are covered only
by a warranty against “material defects in design and manufacture” lasting
ninety days from the first time of use.142 Commissary company Union
Supply sells tablets in the California state prison system. Although Union
Supply’s warranty period is nominally 180 days, any warranty claims made
after the ninetieth day require payment of a $50 “non-refundable
administrative and processing fee” (an amount equal to nearly one-third of
the device’s purchase price).143 The Union Supply contract further makes
the dubious claim that tablets are “customized” goods and therefore buyers
may not obtain a refund under any circumstances (even if a family member
mistakenly purchases a tablet for a loved one housed in a facility that does
not allow tablets)144—a provision that is likely unenforceable as an
unreasonable restriction on a buyer’s right to inspect and reject purchased
goods.145
In summary, the terms and conditions propagated by prison retailers
serve as a concrete reminder that no one is protecting the interests of
consumers in this sector. Correctional procurement staff appear to be
entirely uninterested in what terms are imposed on consumers. Left to their
own devices, vendors draft terms that are so one-sided it is difficult to call
them contracts. While some onerous provisions may well be unenforceable
under applicable consumer protection statutes, customers are left to figure
out this legal puzzle on their own; and, of course, a customer’s ability to

141. Victoria Law, Captive Audience: How Companies Make Millions Charging
Prisoners to Send an Email, WIRED (Aug. 3, 2018) (citing prices ranging from $40 to $160,
depending on the prison system) https://www.wired.com/story/jpay-securus-prison-emailcharging-millions/.
142. JPay, Inc., Player Purchase Terms and Conditions and Warranty Policy § 5 (Dec.
5, 2017), https://www.jpay.com/LegalAgreementsOut.aspx.
143. Union Supply Group, Inc., Rules and Regulations https://californiainmatepack
age.com/Catalog/MenuCatalogPages/ManageStaticPage.aspx?pageid=Rules (last visted Dec.
6, 2018) (Union Supply does not publicly reveal prices, but other sources have reported that
the tablets cost $159 when the program was introduced.); Malik Harris, New Policy Allows
Prisoner to Purchase Tablets, SAN QUENTIN NEWS (Jan. 1, 2016) https://sanquentinnew
s.com/new-policy-allows-prisoner-to-purchase-tablets/.
144. Id. (The claim of custom-made status is based on the fact that Union Supply asks
purchasers to select electronic content during the purchase process, and that content is then
installed on the device that is shipped. The legal relevance of this so-called customization is
unclear. As a practical matter, the content loading does not have any impact on the seller’s
ability to re-sell the device, because—according to Union Supply’s own terms of service—
content is loaded onto a removable SD card).
145. See U.C.C § 2-513, § 2-601; See U.C.C. § 2-719(1) and cmt. 1 (parties may
contractually modify remedial provisions of U.C.C. Article 2, but “they must accept the legal
consequence that there be at least a fair quantum of remedy for breach of the obligations or
duties outlined in the contract.”).

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exercise their legal rights may be hindered or extinguished entirely given
the frequent use of arbitration provisions and class adjudication
prohibitions.
Advertising, Privacy, and Consumer Psychology
Incarceration, for many people, is a prolonged, slow-motion disruption
of normal life, punctuated by periods of unpredictable violence. Certain
aspects of incarceration can be analogized to being trapped in a natural
disaster: you are cut off from loved ones, physical harm is a constant threat,
and the future is full of unknowns. Many areas of the law provide special
protection for people who must procure critical goods or services in
stressful situations: price-gouging statutes prevent unfair fuel pricing in a
natural disaster,146 the Federal Trade Commission prohibits exploitation of
grieving relatives purchasing funeral services,147 and countless occupations
(from hearing aid salespeople148 to pawnbrokers149) are subject to wideranging regulatory systems designed to protect consumers whose ability to
protect their interests may be impaired. In the case of prison retailing,
however, there is a dramatic lack of structural safeguards against
exploitation.
Meanwhile, prison retail companies (likely motivated by dual desires to
increase sales and disguise the greed that shapes their business models) use
advertising to portray themselves as caring providers who hold the precious
keys to comfort (commissary items), normalcy (communication with family
members), or post-incarceration survival (educational opportunities). The
industry’s advertising practices raise questions about the unchecked
power—both persuasive and coercive—of prison retail vendors.
The simplest type of misleading advertising is a mere promise of hope
based on incomplete facts. For example, family members who want to send
money or an electronic message through JPay must go to the company’s
homepage, where a prominent banner ad cycles through various messages
immediately next to the sign-up form. The reference to “educational
platforms,” accompanied by images of the formal trappings of academia,
evokes thoughts of intellectual engagement and increased earning potential.
In actuality, the platforms referenced in the ad consist of “KA Lite” and
“JPay’s Lantern.” The ad does not mention the limitations of the two
146. Nat’l Consumer Law Ctr., Unfair and Deceptive Acts & Practices § 4.3.11.2 (9th
ed. 2016).
147. 16 C.F.R., §. 453.
148. John C. Williams, Annotation, Validity and Construction of State Statutes
Regulating Hearing Aid Fitting or Sales, 96 A.L.R.3d 1030 (1979).
149. Tracy Bateman Farrell, Annotation, Validity of Statutes, Ordinances, and
Regulations Governing Pawn Shops, 16 A.L.R.6th 219 (2006).

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platforms. KA Lite is a collection of open-source videos that JPay has
acquired, presumably for free, and makes available for “self-guided
learning.”150 Lantern, meanwhile, is not a universal education program, but
is simply a platform that each facility can choose to utilize or not.151 While
JPay has clearly invested in a slick marketing campaign, it does not appear
to adequately disclose the limitations of its product.
A series of advertisements by Securus illustrate how marketing can
raise concerns about consumer privacy. The campaign, which uses the tagline “Connecting to what matters,” features extensive excerpts from what
appear to be actual video visitation sessions with incarcerated fathers and
their minor children.152 The videos use unsettling intimate footage,
featuring men using video visitation to see their children engaged in normal
childhood activity like homework or celebrating holidays.153 It is not clear
whether the people in the ads are actors or actual customers, but given the
lack of a disclaimer, one would assume the footage depicts actual users.154
Even though Securus’s privacy policy warns customers that they should
have no expectation of privacy, the policy only speaks of call content being
used for law enforcement purposes, with no mention of marketing
activities.155 To the extent that the individuals in the videos are not actual
customers, then the lack of a disclaimer likely constitutes a deceptive
advertising practice, since their reactions do not accurately reflect those of
150. JPay, supra note 79.
151. See Jpay, supra notes 79 and accompanying text. JPay’s education page claims
that “Tens of thousands of incarcerated students have earned college credits, studied for their
GEDs, and participated in other educational activities through JPay’s Lantern.” JPay, supra
note 79. The lack of details raises immediate questions about the meaning of this claim,
along with the imprecise spectrum that encompasses everything from earning college credit
to “participating in other educational activities.”
152. Connected, Securus Technologies, https://www.ispot.tv/ad/AXF1/securus-techno
logies-connected (2016); Homework, Securus Technologies, https://www.ispot.tv/ad/AxS1
/securus-technologies-homework (2016).
153. See Securus, Be there Advertisement (Oct. 19, 2019) https://www.ispot.tv/ad/
Axgw/securus-technologies-video-visitation-celebrating-christmas. Using this ad image
presents an ethical challenge. On the one hand, an image is worth the proverbial thousand
words. On the other hand, it is awkward to criticize the exploitation of families and then use
a screenshot of a child who may not have consented to the use of his likeness. In the end, I
have erred on the side of transparency, but not without second thoughts.
154. The FTC’s advertising endorsement rules require disclosure when actors are used
to portray customers. 16 C.F.R. § 255.2(c) (“Advertisements presenting endorsements by
what are represented, directly or by implication, to be ‘actual consumers’ should utilize
actual consumers . . . or clearly and conspicuously disclose that the persons in such
advertisements are not actual consumers of the advertised product.”). Although the
consumers in the Securus ads do not make any express statements concerning the video
visitation product, their presence in the advertisements still constitutes an “endorsement”
under the FTC’s expansive definition. See 16 C.F.R. § 255.0(b) and example 5.
155. See Securus T&C, infra notes 172 and accompanying infra note 174.

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real users. Alternatively, to the extent that the ads do depict actual
customers, one wonders whether the customers were compensated for use
of their images, and if so, what they received? Was separate compensation
paid to the children in the ads, and were non-incarcerated parents
consulted? Even if Securus complied with all applicable laws, the use of
children in these ads evidences a disturbing willingness to disregard
customer privacy and exploit the very personal pain that children of
incarcerated parents frequently experience.156
Apart from concerns about advertising, Securus’s use of video
visitation footage of children as part of its Threads database appears to be a
likely violation of the Children’s Online Privacy Protection Act
(“COPPA”).157 While the application of COPPA to VoIP calls is less than
clear, the statute almost certainly applies to ICS video visitation services.158
As relevant in this context, COPPA (through its implementing regulations
promulgated by the FTC) prohibits the “collection, use, or disclosure of
personal information from children” without the verifiable consent of the
child’s parent159 (“children” are defined as children under thirteen160).
“Personal information includes not just contact information but also “[a]
photograph, video, or audio file where such file contains a child’s image or
voice.”161 Securus’s description of its Threads product makes it clear that
video recordings are shared with facilities and agencies throughout the
country, which—when it comes to recordings of children—seems to be a
rather clear-cut violation of COPPA.162 Notably, COPPA’s parental

156. See Children on the Outside: Voicing the Pain and Human Costs of Parental
Incarceration (Tides Center/Justice Strategies, Brooklyn, N.Y), January 12, 2011, at 5.
(“Unlike children of the deceased or divorced who tend to benefit from society’s familiarity
with and acceptance of their loss, children of the incarcerated too often grow up and grieve
under a cloud of low expectations and amidst a swirling set of assumptions that they will
fail, that they will themselves resort to a life of crime or that they too will succumb to a life
of drug addiction.”).
157. Pub. L. 105-277, div. C, title XII, 112 Stat. 2681-2728 (codified as 15 U.S.C. §§
6501-6506).
158. COPPA applies to “operators of websites,” defined as “any person who operates a
website on the Internet or an online service and who collects or mtains personal information
from or about the users of . . . such website or online service . . . where such website or
online service is operated for commercial purposes.” 15 U.S.C. § 6501(2).
159. 16 C.F.R. § 312.5(a)(1).
160. Id. § 6501(1).
161. 16 C.F.R. § 312.2.
162. COPPA prohibits unauthorized “disclosure” of children’s information, with
disclosure defined as “the release of personal information collected from a child in
identifiable form by an operator for any purpose.” 15 U.S.C. § 6501(4)(A). While there is a
law-enforcement exception under the FTC’s rules, that exception is quite narrow and doesn’t
appear to cover Securus’s usage of children’s video footage. Specifically, 16 C.F.R. §
312.5(c)(6)(iv) creates a law-enforcement exception that applies only to the disclosure of

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consent provisions highlight just how abusive Securus’s terms of service
are. COPPA covers the “collection” of information, the “use” of
information (by the website operator who collected the information), and
the “distribution” of information (to third parties). The implementing rules
expressly provide that parents be given “the option to consent to the
collection and use of the child’s personal information without consenting to
disclosure of his or her personal information to third parties.”163 Securus
runs roughshod over this rule, by not offering such an option to parents, but
rather announcing as a foregone conclusion that video contents will be
shared with law enforcement. Violations of COPPA’s implementing
regulations may form the basis for a private cause of action for unfair or
deceptive trade practices under the FTC Act.164
Finally, prison retailers are apt to steer vulnerable consumers into
unneeded or inefficient transactions
by leveraging the emotional
impulses of concerned family
members. For example, family
members who use JPay may
receive automated emails identified
as coming from a specific
incarcerated correspondent (Figure
2). The message, written in the
first person, states “I wanted to let
you know that my Media Account
balance is running low. . . . Your
support is appreciated, and it’s
really easy to fund my Media
Account.”
Money transfer
instructions then follow. Only at
the end of the message is there a
disclaimer (partially cut off on an
iPhone 6, which has a healthy
screen height of 5.43 inches)
stating “This email was sent by
JPay on behalf of your loved one.”
In another example, ICS provider
children’s name “name and online contact information” that is collected for “the purpose
of . . . provid[ing] information to law enforcement agencies or for an investigation on a
matter related to public safety; and where such information is not be used [sic] for any other
Figure 2information”
Automated JPay
funding
purpose.” The category of “name and online contact
does account
not include
video or
message.
This
is an§image
audio files containing children’s voices or images.
See 16
C.F.R.
612.2.of an automatic email sent to a customer. The author has
163. 16 C.F.R. § 312.5(a)(2).
permission from the customer to reprint this
164. 16 C.F.R. § 312.9.
image.

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Telmate (which was acquired by GTL in 2017), used to allow callers from
Alabama jails to speak to family members for less than a minute at the
beginning of a call, after which time a recording interrupted to seek
payment.165 The receipients of such calls are typically family members who
are eager to help their loved ones and are therefore likely to hand over their
payment information without a clear disclosure of costs; yet even those
family members who took the time to navigate Telmate’s phone menu were
given a misleading rate disclosure of $2.39 (flat rate for up to 15 minutes)
plus “applicable taxes and fees,” where the unspecified “taxes and fees”
apparently totaled $8.94 (or 374% of the base rate), yielding a total cost of
$11.33 (or 76¢ per minute).166 Similar recordings used by Securus tend to
stear distraught family members into accepting calling products that include
a $3 per-call fee that can be avoided, but only by terminating the call (an
emotionally difficult action) and setting up an account.167
Communications tactics in the prison-retail setting illustrate how no one
is monitoring the contents for accuracy and fairness. In many markets,
deceptive advertising and product information can be identified and
addressed by competitors But in prison, vendors’ communications can
mislead and manipulate family members unchecked by any countervailing
market forces.
Data Insecurity
Given the large amounts of data that prison retailers (particularly ICS
carriers) collect from customers, data privacy should be front and center in
policy debates about the rights of the incarcerated and their families.
Instead, such issues are rarely discussed and are governed by vague
provisions buried in one-sided privacy policies. The reach of “big data”
should be of particular concern to anyone with direct or even indirect
involvement in the justice system, because of the numerous ways in which
police, courts, probation systems, and correctional facilities are using data
to make decisions about individuals’ lives. In the criminal justice system
poorly-planned algorithms can shape policing strategies, investigative
outcomes, and sentencing decisions in ways that too often penalize people
either for being poor or for maintaining relationships with people who have
criminal records.168 Moreover, expanding the scope and use of big data in
165. Comments of Robin B. Fussell, In the Matter of Rates for Interstate Inmate
Calling Services, WC Docket No. 12-375 (June 16, 2015), available at https://www.
fcc.gov/ecfs/filing/60001071303.
166. Id.
167. Wagner & Jones, supra note 54, at appx. 11.
168. CATHY O’NEIL, WEAPONS OF MATH DESTRUCTION: HOW BIG DATA INCREASES
INEQUALITY AND THREATENS DEMOCRACY 98 (2016) (Prison systems “[a]ll too often . . . use

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criminal justice systems increases the chances of intentional or
unintentional racial discrimination based on proxy data that correlates with
race.169
ICS carriers collect a wealth of information about customers, which
comes from at least four sources. First, companies hold payment data, both
in the form of payment-card information and transaction histories. Second,
some services require family members to verify their identity by uploading
copies of government identification documents.170 Third, carriers record
and store the actual content of communications (phone calls, written
messages, or video chats) which are transmitted on their platforms.171
Finally, some carriers collect geolocation information from family
members’ cell phones.
When family members receive calls or initiate electronic
communications on ICS platforms, they are typically advised by an
automated system that their communications will be monitored, yet the
nature and extent of such monitoring is neither transparent nor intuitive.
Take Securus’s privacy policy regarding its video visitation product, which
states that family members must consent to call data being “accessed,
reviewed, analyzed, searched, scrutinized, rendered searchable, compiled,
assembled, accumulated, stored, used, licensed, sublicensed, assigned, sold
transferred and distributed” by “Law Enforcement.”172
Someone
communicating with a loved one in the California prison system may
reasonably expect the reference to “law enforcement” to refer to the
California state prison system and probably the state police. Instead, the
defined term in Securus’s contract is much broader—law enforcement is
data to justify the workings of the system but not to question or improve the system.”).
169. Anya Prince & Daniel Schwarcz, Proxy Discrimination in the Age of Artificial
Intelligence and Big Data, IOWA L. REV. (forthcoming 2020) (manuscript at 35) (on file with
author) (“[T]he inevitable tendency of [artificial intelligence] to proxy for race when that
characteristic is genuinely predictive of a facially neutral objective . . . can affirmatively
reinforce past discrimination. Proxy discrimination can produce this result because it
affirmatively harms those who it targets, subjecting them to increased police scrutiny or
decreased chances of early release from prison. This, in turn, denies opportunities to and
increases risk for this population.”)
170. Securus’s video visitation system, for example, directs users to upload “a copy of
your government issued photo ID and a photo of yourself” when creating an account.
171. In addition to communications that are actually initiated on a specific network,
vendors can also end up capturing and storing communications that were initially sent as
private communications through the U.S. mail, when facilities hire contractors to scan and
reprint incoming mail. See supra, note 47. Attorneys have expressed particular concern
about such systems, which can effectively destroy a lawyer’s ability to securely and
confidentially communicate with incarcerated clients. See Zuri Davis, Pennsylvania’s New
$4 Million Prison Mail System Brings Privacy Concerns, HIT & RUN BLOG (Oct. 10, 2018),
https://reason.com/blog/2018/10/10/pennsylvanias-4-million-prison-mail-scan.
172. Securus T&C, supra note 117, Privacy Policy § II(J).

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defined as “personnel involved in the correctional industry (federal, state,
county and local), investigative (public and private), penological or public
safety purposes and specifically including the Department of Homeland
Security and any other anti-terrorist agency (federal, state and local).”173
The reason for this broad (if grammatically fractured) definition is that
Securus offers its law enforcement customers a product marketed under the
name “Threads.”174 Threads aggregates data from correctional facilities
throughout the country and shares it with other participating facilities.175
Securus markets Threads by proclaiming that “digital evidence is
everywhere.”
Securus’s unquenchable thirst for data does not seem to be
accompanied by a commitment to protect customers’ privacy, as
highlighted in two separate incidents from recent years. First, in 2014,
hackers obtained call records and access to call recordings for over 70
million phone calls on the Securus system, including privileged calls
between clients and attorneys. The details of the data breach were revealed
in press reports in November 2015.176
Second, a substantial body of evidence concerning Securus’s recording
of privileged calls has surfaced in a criminal case in Kansas. The case
started with a 2016 federal indictment concerning illegal activity in a
correctional facility operated by Corrections Corporation of America
(“CCA”). During discovery, defense attorneys found that the U.S.
Attorney’s Office (“USAO”) had obtained recordings of privileged phone
calls made by their clients.177 The district court appointed a special master
173. Id. (emphasis added).
174. Securus’s marketing materials and contracts actually refer to the product as
“THREADS™.” For ease of readability, and because the name does not appear to be an
acronym, it is referred to here with the more reader-friendly capitalization “Threads.”
Securus describes Threads as “[s]ystems that merge big data, voice biometrics, and pattern
identification, providing early detection and alerts for investigators, attorneys, courts and
criminal justice systems.” Securus Technologies, Inc., Response to Request for Proposals
RFP 18-021 (Fort Bend County, Texas) (Oct. 17, 2017), at 261 (on file with author).
175. Master Services Agreement, supra note 120, at 5 (“THREADS™ offers an
optional ‘community’ feature, which allows member correctional facilities to access and
analyze corrections communications data from other correctional facilities within the
community and data imported by other community members.”).
176. Jordan Smith & Micah Lee, Not So Securus, The Intercept (Nov. 11, 2015),
https://theintercept.com/2015/11/11/securus-hack-prison-phone-company-exposes-thousan ds-ofcalls-lawyers-and-clients/.
177. U.S. v. Black, et al., No. 16-CR-20032-JAR, at 1-3 (D. Kan. Jan. 12, 2018) ECF
No. 372 (memorandum and order on United States’ motion to terminate special master). The
caption of this case is somewhat unusual insofar as it began as U.S. v. Black, because the
first named defendant was Lorenzo Black. Mr. Black subsequently pleaded guilty and was
sentenced, at which point the caption became U.S. v. Carter, although the court continues to
refer to the litigation under the name Black. See U.S. v. Carter, No. 16-CR-20032-02-JAR,

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to investigate the extent of the improper recordings and the government’s
use of such evidence.178 After cooperating with the special master’s
investigation for over a year, the USAO reversed course in 2018, and began
resisting discovery requests and challenging the court’s jurisdiction to
appoint a master.179 Eventually, the court set the matter for trial and
received evidence over the course of ten days, ultimately issuing a
remarkable 188-page opinion. Among other things, the court found that
prosecutors’ unorthodox legal reasoning, “coupled with their lack of
research and investigation about the CCA phone system, led to their
exploitation of vulnerabilities stemming from CCA’s flawed system of
recording practices.”180 The opinion explains that calls with defense
attorneys were “routinely recorded” despite attorney’s having properly
requested protection of privileged communications.181 A Securus executive
testified that it was CCA’s responsibility to program designated attorney
phone numbers into the calling system (thereby preventing recording), but
his testimony revealed at least five different ways in which human error
could prevent this process from working correctly.182 A CCA employee
testified that he was responsible for entering attorney phone numbers in the
system, but he “routinely” made errors when doing so.183 As for the USAO,
the court found that the agency had regularly received privileged recordings
when investigating all types of criminal case in the district, but had publicly
claimed that no such practice existed.184
This case is somewhat narrow in light of its unusual procedural posture
(the investigation was conducted under Federal Rule of Criminal Procedure
41(g)),185 but it has led to an extensive number of collateral suits. At last
2019 WL 3798142, at 4, n.10 (D. Kan. Aug. 13, 2019) Following the court’s lead, this article
refers to the case as Black, although individual citations use whatever caption happens to
appear on the particular document cited.
178. Memorandum & Order, U.S. v. Carter, No. 16-CR-20032-JAR, 2019 WL 32957,
at 2-5 (D. Kan. Jan. 25, 2019), ECF No. 713 (describing special master’s appointment and
investigation).
179. U.S. v. Carter, 2019 WL 329573, at 6-8 and 17.
180. U.S. v. Carter, 2019 WL 3798142, at 51. For the court’s discussion of the
USAO’s dubious position concerning waiver of the attorney-client privilege, see Id. at 52.
181. Id. at 37.
182. Id. at 40.
183. Id.
184. Id. at 49-50 (based on incomplete data that likely understates the problem, the
court found that when prosecutors obtained recordings of a defendant’s phone calls, there
was a greater than one-in-four chance that the responsive recordings included privileged
attorney calls).
185. Fed. R. Crim. P. 41(g) (“A person aggrieved by an unlawful search and seizure of
property . . . may move for the property’s return. . . . The court must receive evidence on
any factual issue necessary to decided the motion.”); see also Order, In re United States of
America, No. 18-3007 (10th Cir. Feb. 26, 2018) (partially granting the U.S. Attorney’s

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count over 110 defendants had sought relief from their sentences under 28
U.S.C. § 2255 based on the facts that came to light in this case,186 and civil
class actions have also been filed by both clients187 and attorneys188 who
had their calls recorded.
While the 2014 and 2016 incidents impact parties utilizing Securus’s
calling products, other incidents have implicated the privacy rights of
everyone with a cell phone, including people who have never placed or
received a call involving Securus’s network. Securus offers (or at least,
offered until recently189) a free add-on product referred to as “location based
services” (“LBS”), which allows law-enforcement staff to obtain “a mobile
device user’s approximate geographical location.”190 Securus’s LBS uses
data provided by the major wireless carriers, and can provide location
information for virtually any U.S. cell phone.191 Although agencies using
LBS are supposed to ensure that they have proper authorization (such as a
warrant or court order) to obtain phone location information, Securus’s
contract with facilities disclaims any responsibility on Securus’s part for
ensuring compliance with applicable law.192 In 2018, federal prosecutors
accused Missouri Sheriff Cory Hutcheson of uploading defective or
completely irrelevant documents (which were apparently not reviewed by a
human being) to improperly obtain cell-phone information from Securus’s
LBS platform.193 The indictment alleges that over an approximately threeyear period, Hutcheson improperly obtained “thousands” of cell-phone
petition for mandamus in the Black litigation, and restricting the scope of the District Court’s
investigation to defendants before the court).
186. U.S. v. Carter, 2019 WL 3798142, at 84.
187. Huff v. CoreCivic, Inc. f/k/a Corr. Corp. of Am., No. 17-cv-2320-JAR (D. Kan).
The court certified a class and granted preliminary approval to a settlement on September 26,
2019. See ECF No. 146.
188. Complaint, Crane v. Corecivic, No. 16-cv-947 SRB (W.D. Mo. Mar. 8, 2018),
ECF No. 32 (alleging violations of federal and state wiretap statutes).
189. It is difficult to ascertain the current status of LBS services in general. After the
original story broke, the large wireless carriers made claims of increased privacy protections
that now look to have been false. See Joseph Cox, Sprint to Stop Selling Location Data to
Third Parties after Motherboard Investigation, Motherboard (Jan. 16, 2019), https://mother
board.vice.com/en_us/article/qvqgnd/sprint-stop-selling-location-data-tmobile-att-microbiltzumigo.
190. Master Services Agreement, supra note 118, at 6.
191. Jennifer Valentino-DeVries, Service Meant to Monitor Inmates’ Calls Could
Track You, Too, N.Y. TIMES (May 10, 2018), https://www.nytimes.com/2018/05/10/
technology/cellphone-tracking-law-enforcement.html.
192. Master Services Agreement, supra note 118, at 6.
193. Superseding Indictment, U.S. v. Hutcheson, No. 18-cr-041-JAR (E.D. Mo., Aug.
17, 2018). Securus requires users to upload a legal authorization, but the indictment
indicates that Hutcheson repeatedly uploaded sham documents “including his health
insurance policy, his auto insurance policy and pages selected from Sheriff training
materials.” Id. at ¶ 22.

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locations, including for phones used by other law enforcement agents and a
state judge. The indictment contained twenty-eight criminal counts,
including wire fraud, identity theft, and violations of the Telephone Records
and Privacy Protection Act. As part of a plea deal, Hutcheson pleaded
guilty to two charges in April 2019;194 meanwhile, civil litigation against
Hutcheson is pending in the Eastern District of Missouri, asserting claims
under § 1983 and for common-law invasion of privacy.195 The plaintiffs in
the civil case have only named the sheriff as a defendant, and it remains
unclear whether Securus could be subject to liability for mishandling
private call information, but there is a suggestion that the FCC is
conducting an enforcement investigation concerning Securus’s use of
LBS.196
In a new privacy policy published in January 2019, GTL reveals that it
tracks the geographic location of any cell phone that receives a call on its
ICS platform, both when the call is connected and for sixty minutes
afterward. GTL’s privacy policy misleadingly states that customers can
“opt out” of this location tracking, but actually the ability to opt out is
limited to the sixty-minute trailing period. The only way to opt out of
location tracking entirely is to not use GTL’s services.197
Telecommunications companies are not the only prison retailers who
compile customer data that could be put to other unexpected uses.
Correctional banking firms amass substantial transactional data that can
also serve as grist for law-enforcement datasets. The Federal Bureau of
Prisons in 2015 proposed an amendment to its commissary regulations that
would have required family members sending money to consent to the
Bureau’s “collection, review, use, disclosure, and retention of, all related
transactional data, including the sender’s personal identification
information.”198 The rule would have also allowed the same use of data by
“service providers.” After advocacy groups objected to the new rule as a
violation of the Right to Financial Privacy Act (“RFPA”),199 the Bureau
194. Judgment, U.S. v. Hutcheson, No. 18-cr-041-JAR (E.D. Mo., Apr. 29, 2019).
195. First Amended Complaint, Cooper v. Hutcheson, No. 17-cv-073-ACL (E.D. Mo.
Apr. 2, 2019).
196. Wright Petitioners’ Reply to Joint Opposition to Petition to Deny, In the Matter of
Joint Application of TKC Holdings, ICSolutions, and Securus Technologies for Grant of
Authority, WC Dkt. No. 18-193, at 6 (July 30, 2018) (“It is understood that an enforcement
inquiry is underway to determine whether Securus in fact violated Section 222 of the Act
and the Commission’s rules related thereto.”).
197. Global Tel*Link Corp., Privacy Policy, http://www.gtl.net/privacy-policy-en/at ¶
1(D) (last visited Jan. 17, 2019).
198. U.S. DEPT. OF JUST., Bureau of Prisons, Proposed Rule, Inmate Commissary
Account Deposit Procedures, 80 Fed. Reg. 38658, 38660 (July 7, 2015) (proposed 28 C.F.R.
§ 506.3).
199. 12 U.S.C. § 3401, et seq.

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appears to have abandoned the proposal;200 however, the RFPA provides
limited protections because it applies only to collection of transactional
information by the federal government.201 The terms of correctionalbanking privacy policies impart little information about how the vendor will
use family members’ financial data. For example, TouchPay (a GTL
subsidiary) states that it may share customer information with “third
party . . . service[] providers who provide services . . . on our behalf, such
as . . . analyzing data.”202
Such open-ended provisions provide no
meaningful information on data usage, specifically any usage that may
make the vendor a data furnisher for purposes of the Fair Credit Reporting
Act.203
Perhaps the most troublesome data-related practice by prison retailers is
a seeming unwillingness to seriously comply with commonly accepted datasecurity frameworks. As Professor William McGeveran has shown in his
analysis of fourteen leading systems of data security, a generally accepted
legal duty of data security has begun to emerge from various sources of
public and private law.204 As companies become more attuned to data
security, many of these accepted principles become enforceable duties
through the force of contractual agreements.205 But with correctional
administrators apparently unconcerned about the security of consumers’
data, there does not appear to be growing use of contractual commitments
to enforce security standards, thus leaving legislative action as the last
apparent line of defense.
Potential Sources of Protection
Most problems facing consumers in the prison retail-sector can be
traced back to one fundamental shortcoming: on both the state and federal
levels, no entity has been tasked with protecting the interests of incarcerated
people or their families. Such protection could be provided either through
the procurement process or through ex ante regulation, but neither type of
200. See Comments and Petition for Further Rulemaking, RIN 1120-AB56 (Sept. 1,
2015), available at https://www.regulations.gov/contentStreamer?documentId=BOP-20150004-0003&attachmentNumber=1&contentType=pdf. Although the Bureau of Prisons has
never formally rescinded the proposed rule, it is now listed as “inactive” on the Office of
Information and Regulatory Affairs’ Fall 2018 unifed agenda of federal regulatory actions.
See https://www.reginfo.gov/public/do/eAgendaInactive.
201. 12 U.S.C. §§ 3401(3), 3402.
202. TouchPay Holdings, LLC, Privacy Statement at ¶ 5(B) https://www.gtlfsonline
pay.com/portal/includes/privacy.html (last visited Jan. 17, 2019).
203. See 15 U.S.C. §1681s-2.
204. William McGeveran, The Duty of Data Security 102 MINN. L. REV. 1135, 1178
(2019).
205. Id. at 1172-78.

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reform has happened, usually for lack of political will. As discussed in this
section, some laws do provide protections to prison-retail customers, but
these provisions tend to be piecemeal, outdated, and not created with
incarcerated people in mind. Without a regulatory agency specifically
focused on fairness and equity in the prison retailing sector, advocacy
groups have been pursuing increasingly sophisticated strategies to fill in the
gaps in consumer protection. While litigation and regulatory advocacy
have produced victories, such efforts are unlikely to result in
comprehensive protections without laws that are intentionally designed to
provide ex ante consumer protections to incarcerated people.
Telecommunications Law
As noted previously, the landmark Wright rulemaking grew out of a
2000 lawsuit challenging ICS rates.206 When referring the matter to the
FCC under the doctrine of primary jurisdiction, the district court
specifically cited two statutory grants of jurisdiction that allowed the
Commission to address the plaintiffs’ concerns. First, the court pointed to
the FCC’s powers over common carriers, contained in title II of the
Communications Act, specifically the mandate to ensure that carriers’
“charges, practices, classifications, and regulations” are “just and
reasonable.”207 In addition, the court cited the 1996 Act’s payphone
provision, § 276, which directs the FCC to ensure competition and “fair
compensation” in the payphone industry while also classifying all “inmate
telephone service” as payphone service.208
In 2015, when the FCC issued its final ICS rules, it relied on both title
II and § 276 for jurisdiction.209 The final rule imposed rate caps on all ICS
calls (both inter- and intrastate) and capped ancillary fees.210 Significantly,
the FCC reaffirmed its earlier finding that, for purposes or regulatory
accounting, site commissions were not a legitimate cost of providing
communications services.211 Two commissioners dissented from the final
rule. Commissioner Michael O’Rielly’s dissent appears to be motivated in
part by antipathy toward incarcerated people,212 but then-Commissioner
206. See supra note 17.
207. Wright v. Corr. Corp. of Am., No. 00-cv-293-GK, slip op. at 6-7 (D.D.C. Aug. 22,
2001), ECF No. 94 (citing 47 U.S.C. § 201(b)).
208. Id. at 8.
209. Second Report & Order, supra note 40 at ¶ 3, n.12 and at 12766.
210. Id. at 12769.
211. Id. at 12819.
212. Id., Dissenting Stmt. of Comm’r Michael O’Rielly, 30 FCC Rcd. at 12971
(“Despite the intentions of supporters, it is highly probable that the end result of the changes

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(now Chairman) Ajit Pai wrote a more analytical dissent that accurately
presaged the outcome of the ICS industry’s petition for review to the U.S.
Court of Appeals for the District of Columbia Circuit. Pai’s dissent
criticized two aspects of the final rule. First, he expressed doubt that the
FCC had jurisdiction to regulate intrastate rates and charges. In making this
argument, Pai conceded that many of the protections in the rule could be
validly enacted as to interstate calls under the commission’s title II
authority, but he found the intrastate rate caps to be insufficiently
authorized by title II or § 276.213 Pai’s second point of dissent addressed
the Commission’s calculation of the rates caps, which he argued did not
allow ICS carriers to recoup their costs.214
The FCC issued its final rule in late 2015 and the ICS industry
immediately petitioned for review in the D.C. Circuit. On January 31,
2017, shortly before the court held oral arguments, the FCC General
Counsel filed a notice with the court citing a change in the Commission’s
membership, and stating that the new majority had directed counsel to no
longer defend the Commission’s regulation of intrastate rates or the method
for calculating the 2015 rate caps.215 Although the Wright Petitioners,
along with numerous advocacy groups, had intervened in the litigation and
continued to defend the final rule, the FCC’s partial withdrawal still held
legal significance, because the majority of the appellate panel concluded
that the regulatory provisions that the Commission no longer defended were
not entitled to Chevron deference.216
A split panel of the D.C. Circuit vacated several parts of the FCC’s
2015 rules, in an opinion written by Judge Harry Edwards. The majority
disagreed that the Commission had broad jurisdiction to regulate intrastate
rates, and therefore vacated the rate caps and limits on ancillary fees, as
applied to intrastate calls.217 While the Commission had cited 47 U.S.C.
§§ 201 and 276 as jurisdictional bases for regulating intrastate rates, the
majority focused on § 152(b)’s presumption against FCC regulation of
intrastate communications. The Commission, of course, had addressed this
in this item will lead to a worse situation for prisoners and convicts, to which I am only so
sympathetic.”).
213. Id. at 12960-64.
214. Id. at 12965-69.
215. See generally, Letter from David M. Gossett, Deputy Gen. Counsel, Global
Tel*Link v. Fed. Comm’cns Comm’n, No. 15-1461 (D.C. Cir. Jan. 31, 2017),
216. Global Tel*Link v. Fed. Comm’cns Comm’n, 866 F.3d 397, 407-08 (D.C. Cir.
2017). Although the court issued a subsequent clarifying statement (Id. at 416-19) claiming
that the intrastate rate regulation and rate-cap methodology would have failed even under
Chevron review, Judge Pillard’s dissent deftly points out why these provisions can be
justified as one of several plausible interpretations of the Telecommunications Act, which is
precisely the type of situation that Chevron is designed to address.
217. Id. at 402.

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and relied on § 276 when capping intrastate rates.218 The majority
acknowledged, as it had to, that § 276 allowed the Commission to preempt
state law; however, the court went on to find that § 276’s requirement that
payphone providers be “fairly compensated” allowed the Commission to
require minimal adequate compensation, but did not allow it to limit
unfairly high compensation.219
Dissenting, Judge Cornelia Pillard wrote that the meaning of the faircompensation provision depended on “whether the word ‘fairly’ implies an
ability to reduce excesses, as well as bolster deficiencies, in the
compensation that payphone providers would otherwise receive.” Because
the FCC had adopted the more expansive meaning after developing a
thorough record as part of notice-and-comment rulemaking, Judge Pillard
argued that the Commission’s interpretation was entitled to Chevron
deference and could be reversed only by the agency through a new
rulemaking.220
Although the court was hostile to the Commission’s regulation of
intrastate matters, the majority echoed one of the more surprising aspects of
Commissioner Pai’s dissent, finding that the limits on ancillary fees
associated with interstate calls were proper under the Commission’s title II
powers.221 The practical problem, however, is how to determine whether
any given account fee (e.g., a fee for making a prepayment) is related to
inter- or intrastate calls, if the account is used for both types of
communications.222
As for the Commission’s interstate rate caps, the ICS carriers
challenged the FCC’s methodology, not jurisdiction. The court was largely
sympathetic to the ICS industry, finding that the FCC’s exclusion of site
commissions from recoverable costs was arbitrary and capricious, and
further finding the use of industry-wide cost averages as a basis for rate
caps was legally improper.223 Again parting ways with her colleagues,
Judge Pillard criticized the majority’s finding that site commissions are

218. Second Report & Order, supra note 40, at ¶¶ 108-09.
219. Global Tel*Link, 866 F.3d at 408-12.
220. Id. at 420-21.
221. Id. at 415 (“Contrary to Petitioners’ contentions, the Order’s imposition of
ancillary fee caps in connection with interstate calls is justified. The Commission has
plenary authority to regulate interstate rates under § 201(b), including ‘practices . . . for and
in connection with’ interstate calls.”).
222. Id. at 415 (upholding FCC’s jurisdiction to limit ancillary fees for interstate calls,
but remanding because “we cannot discern from the record whether ancillary fees can be
segregated between interstate and intrastate calls.”); see also Mojica v. Securus Tech., No.
14-cv-5258, 2018 WL 3212037, *5-6 (W.D. Ark. June 29, 2018) (discussing methodological
difficulties of allocating fees between inter- and intrastate calls).
223. GTL, 866 F.3d at 412-15.

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“obviously” costs of providing communications.224 She argued that a
commission “might, in some sense, be ‘related’ to the provision of
payphone services . . . but it is not ‘reasonably’ related because acceding to
such preexisting contractual relationships is inconsistent with the statutory
scheme [of ‘fair compensation’].”225
One of the only substantive portions of the D.C. Circuit’s opinion that
received unanimous approval from the panel was the holding vacating the
Commission’s rule requiring annual reporting of ICS carriers’ revenues and
costs related to video visitation services. The court noted that the
Commission had not explained how video visitation was a “communication
by wire or radio,” as required for the exercise of title II jurisdiction.226
The FCC has not taken steps to issue new rules in the wake of the D.C.
Circuit’s ruling. The Wright class action lawsuit is still open, with the
parties disagreeing on whether there is an ongoing role for the district
court.227 As for call rates, the appellate court vacated the rate caps in the
FCC’s 2015 order, which means interstate ICS rates are now subject to the
higher rate caps contained in the FCC’s 2013 interim order, and intrastate
rates are subject only to regulation by state public utilities commissions.228
In the meantime, ICS carriers have sought to escape intrastate regulation in
some jurisdictions by citing their use of VoIP technology, which is
sometimes exempt from state regulation.229 This leads to the possibility of
wholly unregulated intrastate rates, which is of particular concern in jails,
where incarcerated people are more likely to have ties to the local area and
therefore are more likely to make intrastate calls.
Ironically, the Court of Appeals reinforced the jurisdictional importance
of intra- and interstate calling at a time when even ICS carriers
acknowledge that there is no material difference in cost based on the intra/
interstate distinction.230 Moreover, ICS carriers have already lost their fight

224. Id. at 413.
225. Id. at 424.
226. Id. at 415.
227. See Joint Status Report, Wright v. Corr. Corp. of Am., No. 00-293 (D.D.C., Dec.
28, 2018), ECT No. 216.
228. The 2013 order capped interstate rates at 21¢ per minute for prepaid calls and 25¢
for collect calls, and also created “safe harbor” rates of 12¢ and 14¢ (for prepaid and collect
calls, respectively), which are presumed to be reasonable. First Report & Order, supra note
38 at ¶¶ 60 and 73, 28 FCC Rcd. at 14140, 14147.
229. See Helien, supra notes 129.
230. See Comments of Securus Technologies, Inc., In the Matter of the Amendment of
ARM 38.5.3401, 38.5.3403, and 38.5.3405, the Adoption of New Rule I and the Repeal of
ARM 38.5.3414 Pertaining to Operator Service Provider Rules, Montana Pub. Serv.
Comm’n, at 5 (Sept. 19, 2017) (“[The VoIP technology] used by most ICS providers today
means the ‘distance’ between the origination and termination points of an ICS call has little
to no effect on the transport costs of an ICS call.”).

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to prohibit families from using VoIP routing to engage in a type of proconsumer regulatory arbitrage.231 In 2009, Securus challenged family
members’ right to route ICS calls to a VoIP number assigned to the same
local dialing area as a distant prison in order to take advantage of lower
prices in jurisdictions that have capped intrastate rates.232 The FCC rejected
Securus’s challenge and some consumers can now use this technology to
take advantage of any favorable disparities in inter- and intrastate ICS rates.
Once again, however, the potential salutary effects of VoIP routing
illustrates the differences between customers in prisons and jails. The
family of someone incarcerated for a prolonged period in a distant prison is
likely to have the time and financial incentive to set up a local-dial VoIP
number if it allows for significant savings over the long term. But the
family of someone who unexpectedly lands in jail and must make an
emergency call does not realistically have the ability to leverage such
technology for their benefit.
Although the regulatory future of the ICS industry is unclear for a
variety of reasons, there are three prominent trends that can be gleaned from
recent experience: statutes that lag behind technology, the ascendency of
bundled services and cross-subsidies, and the importance of activism.
Technology Has Outpaced the Regulatory Framework
As is the case in many areas of telecommunications, the law governing
ICS carriers has not kept pace with technology. This is most notable in the
context of § 276, a statute of diminishing relevance outside of correctional
facilities, as payphones disappear from the landscape.233 The disconnect
between statutory language and technological reality becomes even more
prominent as ICS carriers rely increasingly on emerging technologies like
video visitation and electronic messaging to drive revenue. While
legislation clarifying the FCC’s powers over these new services would be
welcome, the Commission need not wait for congressional action, since
existing law already provides sufficient regulatory jurisdiction. There are
strong arguments in favor of regulating non-telephone communications
services under either title II of the Communications Act or § 706 of the
1996 Act.
Section 706 of the 1996 Act expressly directs the FCC to “encourage
the deployment on a reasonable and timely basis of advanced
231. In the Matter of Petition for Declaratory Ruling of Securus Tech., WC Docket.
No. 09-144, Declaratory Ruling & Order, 28 FCC Rcd. 13913 (Sept. 26, 2013).
232. Id. at 5-6.
233. See generally Nathaniel Meyersohn, There are still 100,000 pay phones in
America, CNN Money (Mar. 19, 2018), https://money.cnn.com/2018/03/19/news/companies/
pay-phones/index.html.

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telecommunications capability to all Americans . . . by utilizing . . . price
cap regulation, regulatory forbearance, measures that promote competition
in the local telecommunications market, or other regulating methods that
remove barriers to infrastructure investment.”234 Electronic messaging and
video conferencing are both classified as “advanced communications
services” under the Act and thus fall within the scope of § 706.235 The D.C.
Circuit has characterized § 706 as a grant of authority,236 and the FCC relied
on this jurisdiction when issuing its 2015 Open Internet Order.237 Even
during the brief period when the FCC reclassified internet service as a title
II service, the Commission nonetheless eschewed rate regulation and other
affirmative intervention in favor of substantial regulatory forbearance,
consistent with the policy expressed in § 706.238 Unlike broadband internet
access, for which there is a competitive (if highly concentrated) market, the
FCC has already found that ICS markets are not competitive and therefore
need regulation to correct market failures.239 Section 706’s reference to
making advanced communications available to “all Americans” should be
interpreted for the benefit of incarcerated people, since Congress clearly
had incarcerated users in mind when drafting the inmate phone provision of
§ 276, which was part of the same legislation that enacted § 706.
Accordingly, the FCC already has statutory authority to impose price caps
on new ICS technologies like video visitation and electronic messaging.
Advanced technologies are also susceptible to regulation as a
telecommunications service under title II of the Act. ICS carriers make the
self-interested argument that ICS offerings are information services,
because federal policy (both before and after enactment of the 1996 Act)
has been to avoid regulation of such services.240 But the FCC already
234. 47 U.S.C. § 1302(a) (2015).
235. 47 U.S.C. § 153(1) (2010).
236. Verizon v. FCC, 740 F.3d 623, 637 (D.C. Cir. 2014) (“The question, then, is this:
Does the Commission’s current understanding of section 706(a) as a grant of regulatory
authority represent a reasonable interpretation of an ambiguous statute? We believe it does.”).
237. In the Matter of Protecting and Promoting the Open Internet, GN Docket. 14-28
at 273-282, 30 FCC Rcd. 5601,5721-5724 (Feb. 26, 2015); but see In the Matter of Restoring
Internet Freedom, WC Docket. No. 17-108, Declaratory Ruling, Report and Order, and
Order 267, 33 FCC Rcd. 311, 470 (Jan. 4, 2018) (“We find that provisions in section 706 of
the 1996 Act directing the Commission to encourage deployment of advanced
telecommunications capability are better interpreted as hortatory rather than as independent
grants of regulatory jurisdiction.”).
238. Id. at 434-542.
239. Id.
240. The categories “communications service” and “information service” were first
developed in the FCC’s Computer Inquiries, and subsequently enacted as statutory
definitions as part of the 1996 Act. See 47 U.S.C. §§ 153(24), (50), and (53) (definitions);
Nat’l Cable & Telecommc’ns Ass’n v. Brand X Internet Servs, 545 U.S. 967, 975-977
(2005); See Comments of Prison Policy Initiative, In the Matter of Rates for Interstate

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determined that ICS telephone service is not an information service, and the
same reasoning should be applied to advanced technologies. The essential
defining characteristic of telecommunications service is “the transmission
of information between or among points with no ‘change in the form or
content.’”241 The mutually-exclusive category of information service
encompasses products that store, retrieve, and process information.242 Of
course, ICS telephone service involves extensive computer storage,
retrieval, and processing of information, but in denying the carriers’
requests to classify ICS as an information service, the FCC concluded that
such features were merely used to support the provision of
telecommunications service, and therefore should not be treated as
information services.243 The same can be said for emerging technologies:
the end-user pays to transmit an unmodified message (either text-based or
video) from point to point. The carrier’s use of information services is
incidental to the provision of telecommunications service, and the facility’s
use of extensive computerized security features (which may qualify as
information services) is an entirely separate product.
Although the FCC has assiduously avoided regulating new technologies
under title II, market analysis should lead to a different result in the case of
service in correctional facilities. Even Chairman Pai, who objected to the
extent of the FCC’s new ICS rules, admitted that the ICS market is riddled
with failure and cannot be left to the whims of monopoly carriers.244 Title
II and § 706 allow the FCC to regulate wireline services regardless of the
specific technology utilized, and the Commission can use these powers
(informed by the court’s decision in the Global Tel*Link case) to craft a
regulatory regime that is not artificially limited to only one technology.
The New Cross-Subsidies

Inmate Calling Services, WC Docket No. 12-375, at 4, n.19 (Feb. 8, 2016).
241. Peter W. Huber, Michael K. Kellogg & John Thorne, Federal
Telecommunications Law § 12.2.3 (2d ed. 2018) (quoting 47 U.S.C. § 153(50)).
242. 47 U.S.C. § 153(24) (2010).
243. In the Matter of Petition for Declaratory Ruling by the Inmate Calling Services
Providers Task Force, RM-8181, Declaratory Ruling at 28-32, 11 FCC Rcd. 7362, 73747377 (Feb. 20, 1996) (“[E]nhanced services do not include the functionality between the
subscriber and the network for call set-up, routing, cessation, caller or calling party
identification, or billing and accounting.”).
244. First Report & Order, supra note 38 at 111-131 (Ajit Pai, dissenting) (“I believe
that the government should usually stay its hand in economic matters and allow the price of
goods and services to respond to consumer choice and competition. But sometimes the
market fails. And when it does, government intervention carefully tailored to address that
market failure is appropriate. The provision of inmate calling services (ICS) is one such
market. . . . [W]e cannot necessarily count on market competition to keep prices for inmate
calling services just and reasonable.”).

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Modern regulatory theory generally favors unbundling of services.245
Yet bundled contracts that combine regulated and unregulated services are
common in the ICS sector,246 giving rise to a new twist on the longstanding
problem of cross-subsidies. Historically, U.S. telecommunications law has
focused on one type of cross-subsidy: an incumbent provider using
revenues from regulated services to subsidize unregulated services and
charge below-market rates, thereby undercutting competition.247 The
probable cross-subsidies in the
Table 2. Hypothetical Revenues (Phone
current ICS market are different: Only)
carriers are most likely using
excess revenues from unregulated
video and electronic messaging
service to compensate for the rents
they can no longer collect through
telephone charges. This dynamic
is not merely hypothetical—
Securus has pitched potential investors by touting the fact that 65% of its
2015 corporate revenues came from unregulated business lines in 2015, up
from 0% in 2007.248
The dynamics of the new cross-subsidies are novel, but they are not
unheard of. In his comprehensive categorization of cross-subsidies,
economist D.A. Heald acknowledged that regulated activities could be
subsidized by competitive products, but he characterized such an
arrangement as “uncommon.”249 This type of cross-subsidy cannot be
sustained in the long term, to the extent that the “economy outside the
regulated sector is competitive.”250 Of course, because unregulated prison
communication services are offered on a monopoly basis, the unregulated
245. Joseph D. Kearney & Thomas W. Merrill, The Great Transformation of
Regulated Industries Law, 98 COLUM. L. REV. 1323, 1340 (1998) (“Under the new
paradigm, . . . carriers are required to unbundle . . . end-to-end service into constituent parts
in order to allow end-users to mix and match different service elements to suit their own
needs and tastes.”).
246. See Comments of Prison Pol’y Initiative, In the Matter of Rates for Interstate
Inmate Calling Services, WC Dkt.No. 12-375 (Jan. 19, 2016).
247. In the Matter of Separation of Costs of Regulated Telephone Service from Costs
of Nonregulated Activities, CC Docket. No. 86-111, Report & Order 33, 2 FCC Rcd. 1298,
1304 (Feb. 6, 1987); see also PETER TEMIN, THE FALL OF THE BELL SYSTEM: A STUDY IN
PRICES AND POLITICS 179-190 (1987) (discussion of Congressional action to address crosssubsidization in the Bell system).
248. Securus Lender Presentation, supra note 98, at 26 (“By investing in businesses
that are not regulated by the FCC/PSC/PUCs, Securus has successfully decreased its
exposure to potential rate of return regulation.”).
249. D.A. Heald, Public Policy Towards Cross Subsidy, 68 ANNALS OF PUB. &
COOPERATIVE ECONOMICS 591, 600 (1997).
250. Id.

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market is not competitive, and this unusual breed of cross-subsidy can
likely be perpetuated indefinitely.
When the FCC
designed
rules
to Table 3. Hypothetical Revenues (Bundled)
prevent
incumbent
local exchange carriers
from cross-subsidizing
unregulated services,
the
Commission
framed the issue as
one of ensuring that
regulated
rates
remained just and reasonable.251 The same concerns apply to the new type
of ICS cross-subsides, even though the flow of funds is inverted. The FCC
set ICS rate caps in reference to carrier costs. Although the underlying cost
data are confidential, the FCC calculated the 2015 rate caps with the goal of
allowing carriers to operate profitably. Assuming this means net revenues
roughly in line with the overall telecommunications industry,252 and using
purely hypothetical numbers, a carrier’s profitability for a given contract
could look something like the data shown in Table 2, and the profit margin
can be considered reasonable and just. But if that contract was actually
awarded on a bundled basis for phone service, electronic messaging, and
video visitation, then the carrier’s profit under the contract—including all
revenue and redistributed fixed network costs—could resemble Table 3.
Under this scenario, it is difficult to say that the telephone rates are just and
reasonable when they are an integral, indispensable part of a contract that
yields profits over three times the industry average.
The FCC can easily head off this problem by regulating rates charged
for new technologies, as advocated in the previous section. In the absence
of this preferable resolution, any attempts to regulate telephone rates will
prove to be illusory unless accompanied by robust data collection that
covers all bundled services. Although the D.C. Circuit invalidated the

251. Joint Cost Order, supra note 227 at 37, at 1303 (“We reaffirm that protecting
ratepayers from unjust and unreasonable interstate rates is the primary purpose behind the
accounting separation of regulated from nonregulated activities, just as it is the purpose
behind all of our accounting and cost allocation rules. Our commitment to cost-based rates
demands close attention to the manner in which the costs a company uses to support its
[regulated offerings] are separated from the other costs of the company.”).
252. For illustrative purposes, Prof. Aswath Damodaran of the Stern School of
Business at New York University reports that after-tax unadjusted operating margin for the
telecommunications services sector is 16.59% (as of January 2018). See Aswath
Damodaran, Margins by Sector (US) (Jan, 2019), http://pages.stern.nyu.edu/~adamodar/
New_Home_Page/datafile/margin.html.

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FCC’s attempts to collect data on video visitation revenue and costs,253 the
court did so based on an inadequate record, not on an outright lack of
jurisdiction, thus leaving the door open for a renewed attempt at
comprehensive, technology-neutral regulation of communications service in
correctional facilities.
Advocacy and Activism
The history of activism on behalf of families of incarcerated people in
the United States is long and storied.254 The modern face of organizing
against commercial exploitation of incarcerated people and their families is
the coalition of individuals and organizations that initiated the Wright
rulemaking and state-level campaigns throughout the country. One
unintentionally positive byproduct of the FCC’s years of inaction is that by
the time the Commission finally promulgated rules, a broad coalition of
organizations had found common cause with the Wright petitioners and
joined in the calls for reform.255 Consumer advocacy in the ICS realm has
consisted of litigation, legislative campaigns, and participation in regulatory
proceedings. This work has laid the foundation for the next round of the
fight for fair telecom rates.
Title II of the Communications Act requires “just and reasonable” rates,
and provides consumer with a private cause of action to sue for
violations.256 But exercising this private right can be difficult. Many courts
(including, most obviously, the district court that heard the Wright case257)
have invoked the doctrine of primary jurisdiction when faced with
challenges to rates.258 While this doctrine does not necessarily bring about
the conclusive end of a legal challenge, it can result in decades of delay, as
the Wright Petitioners can attest. Courts have also used the filed rate
doctrine to dispose of consumer litigation, although that doctrine is
253. See GTL, supra note 223.
254. Ruth Wilson Gilmore, You Have Dislodged A Boulder: Mothers and Prisoners in
the Post Keynesian California Landscape, 8 TRANSFORMING ANTHROPOLOGY 12 (1999)
(examining grassroots family responses to mass incarceration).
255. Second Report & Order, supra note 40 at 12926 (in addition to numerous
advocates for the rights of incarcerated people, comments were submitted by religious
communities, disability-rights activists, the American Bar Association, immigrant
communities, the Minority Media and Telecommunications Counsel, and the National
Association of State Utility Consumer Advocates).
256. 47 U.S.C. § 201(a)(1938); 47 U.S.C. § 207(1934); Global Crossing
Telecomm’cns v. Metrophones Telecomm’cns, 550 U.S. 45, 53-54 (2007) (explaining private
cause of action).
257. See Wright v. Corr. Corp of Am., supra note 207.
258. Madeleine Severin, Is There a Winning Argument against Excessive Rates for
Collect Calls from Prisoners? 25 CARDOZO L. REV. 1469, 1490-1494 (2004).

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increasingly inapplicable in deregulated markets.259
At least three class action suits regarding ICS rates have been certified
in recent years. The district court in Fayetteville, Arkansas certified a class
action against Secruus and GTL in 2017, when plaintiffs challenged the
legality of site commissions under title II of the Communications Act and a
claim for common-law unjust enrichment.260 But after the D.C. Circuit
vacated the FCC’s attempts to rein in site commissions, the court
decertified the class and dismissed the named plaintiffs’ claims.261 A
similar suit in New Jersey has faired better. Filed in 2013, plaintiffs
challenged ICS rates under title II, 42 U.S.C. § 1983, New Jersey’s
consumer protection act, and a theory of unjust enrichment.262 Plaintiffs
ultimately chose to seek class certification on only two of their claims:
violation of the New Jersey Consumer Fraud Act (“CFA”), and violations
of the Fifth Amendment Takings Clause (actionable via § 1983). The court
certified both claims over GTL’s objections.263 The New Jersey court
granted class certification on August 6, 2018, and in early 2019 the parties
commenced voluntary mediation. While the New Jersey case is arguably
the most successful ICS litigation since the Wright lawsuit, it is entirely
retrospective—in 2016, the New Jersey legislature prohibited site
commissions, cracked down on ancillary fees, and capped call rates at 11¢
per minute.264 Accordingly, the class action only concerns rates charged
prior to the 2016 legislative fix. Finally, a class action is currently pending
in Massachusetts, alleging violations of that state’s consumer protection act
based on Securus’s payments of site commissions to local jails.265
While litigation is an important tool for advocates, legislative reform
has the potential for more widespread and proactive relief from excessive
telecom rates. As the result of sustained public campaigns, several state
259. See Daleure v. Kentucky, supra note 130.
260. In re Glob. Tel*Link Corp., No. 14-cv-5275, 2017 WL 471571 (W.D. Ark. Feb. 3,
2017); Mojica v. Securus Tech., No. 14-cv-5258, 2018 WL 3212037 (W.D. Ark. June 29,
2018).
261. Mojica v. Securus Tech., No. 14-cv-5258, 2018 WL 3212037 (W.D. Ark. June 29,
2018).
262. Complaint, James et al. v. Global Tel*Link, et al., No. 13-cv-4989 (D.N.J. Aug.
20, 2013).
263. James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3727371 (D.N.J. Aug. 6,
2018) (opinion re: motion to certify class) (Among other things, the court distinguished the
plaintiffs’ New Jersey CFA claims from the unjust enrichment claims in the Arkansas case,
noting that the common law of unjust enrichment depends heavily on plaintiffs’
individualized circumstances, (contravening the commonality requirement of Federal Rule of
Civil Procedure 23(a)(2)), whereas a CFA claim was based on the overall reasonableness of
GTL’s rates, and did not require adjudication of any facts specific to plaintiffs’ specific
situations.); Id. at 11.
264. N.J. Stat. § 30:4-8.12 (2016).
265. See Pearson v. Hodgson, infra note 338.

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and local governments have taken significant steps to curb abuses in the
ICS industry. Such steps can take various forms, including legislativelyimposed rate caps.266 Alternatively, some states have passed more general
mandates, directing correctional facilities to bring ICS rates in line with
non-prison phone services.267 Other jurisdictions have avoided direct rate
regulation, but have eliminated site commissions in an effort to bring down
costs.268 Most promising is the advent of jurisdictions that have committed
to provide phone calls completely free of charge.269
Over several decades, activists have gained enough experience in
litigating ICS issues that this advocacy work is now paying dividends.
While much work remains to be done in the telecommunications area,
advocacy organizations should also prioritize litigation and regulatory
advocacy in other legal fields, as discussed in the following sections.
Financial Services Law, Money Transmitters, and Prepaid Accounts
The phrase “correctional banking” is a bit of a legal misnomer, given
that the actual law of banking is implicated only at the periphery of the
industry. Although inmate trust funds are typically held in some kind of
depository account, the incarcerated person with equitable title to the
money has no direct customer relationship with the depository institution.
The job of a correctional banking vendor is simple: receive deposits and
facilitate payments on behalf of a customer population who are not allowed
to use cash, checks, or payment cards. As a non-bank entity that uses
technology to facilitate payments by or for the benefit of incarcerated
people, correctional banking vendors are a niche type of financial
266. Id. (New Jersey rate caps of 11¢ per minute); 730 Ill. Compiled Statute 5/3-4-1(a5) (7¢ per minute rate caps).
267. R.I. Gen. Laws § 42-56-38.1(b) (“No telephone service provider shall charge a
customer rate for calls made from a prison in excess of rates charged for comparable calls
made in non-prison settings. All rates shall reflect the lowest reasonable cost to inmates and
call recipients.”); 2017 Mich. Pub. Act No. 107 (House Bill 4323) part 2, § 219 (provision
in appropriations bill requiring that any new ICS contracts “shall include a condition that fee
schedules for prisoner telephone calls . . . be the same as fee schedules for calls placed from
outside of correctional facilities.”).
268. S.C. Code § 10-1-210 (“The State shall forego any commissions or revenues for
the provision of pay telephones in institutions of the Department of Corrections and the
Department of Juvenile Justice for use by inmates.”); Nebr. Dept. of Corr. Admin. Reg.
205.03 ¶¶ IX and XII (requiring “rates and surcharges that are commensurate with those
charged to the general public for like services,” and foregoing commissions from ICS
revenue).
269. “NYC Makes Calls from Jail Free, 1st Major US City to Do So,” New York Times
(May 1, 2019), https://www.nytimes.com/aponline/2019/05/01/us/ap-us-free-jail-phone-call
s.html?searchResultPosition=4 (allowance of 21 minutes of free calling time every three
hours).

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technology (or “fintech”) firm.270 But even in an economic sector generally
known for over-hyping its transformative nature,271 correctional banking
fintechs do not provide any type of innovative or valuable service that
justifies the high prices they charge.
One of the few issues in the correctional banking sector to have
received extensive judicial attention provides an informative illustration of
current trends, although for reasons other than those discussed by the
courts. Four circuit courts of appeals have addressed the question of
whether incarcerated people are entitled to interest earned on their trust
account balances,272 with only one court holding that the beneficiary has a
property right to earned interest.273 Given the small balances in most
incarcerated peoples’ trust accounts, and today’s low interest rates, this may
seem like an academic debate. But the most recent appellate opinion to
address the issue contains an important factual detail.
Young v. Wall involved a challenge to Rhode Island’s 2001 decision to
stop paying interest on trust accounts, when the Department of Corrections
“decided to outsource management of a wide swath of back-room
systems.”274 According to the court, the repeal of the previous interest
policy was the result of “[c]omments from prospective vendors” who
sought the contract to manage Rhode Island’s correctional banking
system.275 The plaintiff in Young did not prevail, and the opinion stands as
an illustration of the prison-retail economy as applied to correctional
banking: accounts that had previously been held and invested by the state
treasurer (with earned interest remitted to beneficiaries) were now
controlled by a vendor and interest income was retained for the benefit of
the DOC.276 This fact pattern is echoed in many correctional-banking
contracts, which seem to prioritize bureaucratic convenience over the best
interests of the incarcerated accountholders.

270. See Adam J. Levitin, “Written Testimony before the U.S. House of
Representatives, Comm. on the Fin. Servs., Subcomm. on Fin. Institutions & Consumer
Credit” at 4 (Jan. 30, 2018), https://perma.cc/SNH7-PU6G (defining a fintech as a nonbank
financial service company that uses “some sort of digital technology to provide financial
services to consumers”).
271. Id. (“[D]espite the regular use of buzzwords like ‘transformative’ and ‘disruptive’
in discussions about fintechs, there really isn’t anything particularly transformative or
disruptive about them.”).
272. See Emily Tunink, Note, Does Interest Always Follow Principal?: A Prisoner’s
Property Right to the Interest Earned on His Inmate Account under Young v. Wall, 642 F.3d
49 (1st Cir. 2011), 92 NEB. L.REV. 212, 213 (2013) (discussing circuit split).
273. Schneider v. Cal. Dept. of Corr., 151 F.3d 1194 (9th Cir. 1998).
274. Young v. Wall, 642 F.3d 49, 52 (1st Cir. 2011).
275. Id.
276. Joint Stmt. of Facts, Young v. Wall, No. 03-220S (D.R.I. Sept. 9, 2005), ECF No.
71.

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This section examines the sources of law that can apply to common
problems in the world of correctional banking, starting with prepayments
and moving on to contemporaneous payments. The section concludes with
a detailed consideration of prepaid debit cards issued to people upon their
release from custody.
Categorizing Prepayments
As alluded to previously, prison retail payments can be sorted into two
major types: prepayments for goods or services and contemporaneous
payments or fund transfers. In the case of prepayment, an incarcerated
person or a family member transfers funds to a vendor who agrees to apply
the amount toward future purchase. Often the vendor will refer to such
prepaid amounts as creating an “account,” but this terminology is
misleading. Prepayments held by vendors are simply unsecured contractual
obligations of the vendor, and should not be analogized to deposit
accounts.277 Making matters even more confusing for consumers, many
correctional banking vendors collect trust account deposits and retailtransaction prepayments, which can cause some consumers to confuse the
two types of transactions (see Figure 1).
Even though prepayments are often disadvantageous to consumers, they
remain common in prison due to a combination of factors. First, facility
instructions or vendor marketing materials may encourage customers to use
prepayment options without fully explaining available alternatives. Second,
incarcerated people may voluntarily prefer prepayments in an effort to
avoid routing funds through trust accounts, where money can be subject to
levies for fees, fines, restitution, or civil judgments.278
Prison-retail prepayments raise the same concerns that are implicated in
many types of consumer prepaid products, specifically merchant insolvency
and loss of prepaid funds through forfeiture provisions.279 Merchant
insolvency should be a major concern for customers because prison retailers
tend to be closely-held firms whose financial health is difficult to gauge. In
the event of an insolvency event, customers with prepaid accounts would

277. See Eniola Akindemowo, Contract, Deposit or E-Value? Reconsidering Stored
Value Products For a Modernized Payments Framework, 7 DEPAUL BUS. & COMM. L.J. 275,
278 (2009) (“[Stored value products] are technology-enabled contractual constructs rather
than deposits, and . . . the use of deposit analogies to analyze them is generally
inappropriate.”).
278. See Mushlin, supra note 30.
279. Norman I Silber & Steven Stites, “Merchant Authorized Consumer Cash
Substitutes,” Hofstra Payments Processing Roundtable, at 3 (Mar. 14, 2018), http://ssrn.com/
abstract=3161453 (describing merchant insolvency and the absence of standard terms as
“universal problems”).

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hold (likely worthless) unsecured claims.280
Pernicious forfeiture provisions can result in substantial unfairness to
customers, by eating away at prepaid balances through “service” or
inactivity fees. Some vendors will refund prepaid amounts upon an
incarcerated customer’s release from custody, while others do not. Some
vendors have even advertised prepaid products as a way for correctional
agencies to avoid unclaimed property laws.281 These provisions are entirely
a creature of private contract and could easily be prohibited through the
terms of the vendor-facility contract. Thus far, few facilities have shown
any interest in protecting consumers by ending such confiscatory practices.
Financial Services Law and Prison-Related Transfers
Laws that can potentially apply to contemporaneous payments and
transfers include the common-law of trusts, the Electronic Fund Transfer
Act (“EFTA”),282 state money-transmitter statutes, and the Gramm-LeachBliley Act (“GLBA”).283 To the extent a transaction involves an inmate
trust account, the first step for consumer advocates should be to analyze
whether the account is a bona fide trust, and if so, whether the trustee (most
likely the correctional system or another government agency) has breached
its fiduciary duty by, for example, allowing a vendor to diminish trust
property by charging unreasonable fees. The trust classification will
depend on the law or administrative policy that creates the inmate trust
system. Although the name “inmate trust account” by itself is not
dispositive, such accounts are often governed by generally applicable trust
law.284 If the general law of trusts applies, beneficiaries may be able to
280. Outside of bankruptcy, the consumer holding a prepayment claim against an
insolvent merchant is likely to receive nothing. In bankruptcy, the consumer may, as a best
case scenario, receive a priority unsecured claim under 11 U.S.C. § 507(a)(7). See Justin R.
Alberto & Gergory J. Flasser, “Solving the Gift Card Conundrum,” AM. BANKRUPTCY
INSTITUTE JOURNAL (Dec. 2016), at 32.
281. See Prison Pol’y Initiative, supra note 46, at 5, n.22.
282. 15 U.S.C. § 1693, et seq.
283. Gramm-Leach-Bliley Financial Modernization Act, Pub. L. 106-102, 113 Stat.
1338 (1999) (codified as scattered sections of titles 12, 15, 16, and 18, U.S. Code).
284. E.g., Matson v. Kansas. Dept. of Corr., 301 Kan. 654 (2015) (“[W]e have no
difficulty finding the plain language of the applicable statutes establishes the inmate trust
fund is, in fact, a trust subject to the [Kansas Uniform Trust Code].”); Washington v. Reno,
35 F.3d 1093, 1101-1102 (6th Cir. 1994) (ruling that people incarcerated in Federal Bureau
of Prisons could challenge the Bureau’s allegedly improper disbursements from the
commissary trust fund, citing Restatement (Second) of Trusts §§ 199-200 (1959)). The
federal Bureau of Prisons maintains two trust funds (the Inmate Trust Fund and the
Commissary Trust Fund). The Department of Justice has taken the position that the Bureau
is subject to different fiduciary duties with respect to the two different funds. See Fiduciary
Obligations Regarding Bureau of Prisons Commissary Fund, 19 Op. O.L.C. 127 (1995).

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challenge transaction fees to the extent the fees are not commercially
reasonable.285 The determination of commercial reasonableness will be
fact-specific and will likely involve a close examination of the purpose of
the inmate trust fund, as defined by the enabling statute or other applicable
authority.286 In addition, if a correctional agency acts as trustee of an
inmate trust and receives commissions from a third-party administrator,
then the agency may be vulnerable to a charge of breaching its duty of
loyalty.287
The EFTA, as implemented by Regulation E,288 likely applies to many
transfers of money by family members, particularly debit-card payments,289
but its actual substantive protections are minimal. From the perspective of
the incarcerated account holder, if an inmate trust account is a bona fide
trust, then it is excluded from the EFTA’s definition of an “account.”290 In
any event, even to the extent that EFTA applies to a particular party or
transaction, the law is largely concerned with preventing unauthorized
transactions, which does not appear to be a widespread problem in prison
retailing. Rather, the primary problem is exorbitant fees, but EFTA
contains little direct regulation of fees,291 instead favoring disclosure of
285. E.g., Upp v. Mellon Bank, N.A., 799 F. Supp. 540, 544-545 (E.D. Pa. 1992)
(finding a breach of fiduciary duty by trustee who incurred bank fees not justified by cost or
results), vacated for lack of diversity jurisdiction sub nom. Packard v. Provident Nat’l Bank,
994 F.2d 1039 (3d Cir. 1993).
286. See, e.g., E. Armata, Inc. v. Korea Commercial Bank of NY, 367 F.3d 123, 133134 (2d Cir. 2004) (holding that trustee of statutory trust created by the Perishable
Agricultural Commodities Act did not breach fiduciary duties by holding trust funds in a
bank account subject to fees because “maintaining a checking account with ‘commercially
reasonable’ terms may facilitate, rather than impede, the fulfillment of a PACA trustee’s
duty to maintain trust assets so that they are freely available to satisfy outstanding
obligations to sellers of perishable commodities” (internal quotation marks and citation
omitted)).
287. Restatement (Third) of Trusts § 78(2) (2007) (“[T]he trustee is strictly prohibited
from engaging in transactions that involve self-dealing or that otherwise involve or create a
conflict between the trustee’s fiduciary duties and personal interests.”).
288. 12 C.F.R. pt. 1005.
289. 12 C.F.R. § 1005.3(b)(1)(v).
290. 12 C.F.R. § 1005.2(b)(3) (Regulation E’s definition of “account” excludes “an
account held by a financial institution under a bona fide trust agreement.”); see also 12
C.F.R., pt. 1005, appx. B ¶ 2(b)(2), cmt. 1 (“The term ‘bona fide trust agreement’ is not
defined by the Act or regulation; therefore, financial institutions must look to state or other
applicable law for interpretation.”).
291. One of the few provisions of the EFTA that regulates fees is an amendment added
by the CARD Act of 2009, which prohibits dormancy and service fees in connection with
gift cards and general-use prepaid cards. 15 U.S.C. § 1693l-1. These rules do not apply to
most prison-retail prepayments, because the statute excludes stored-value products that are
“reloadable and not marketed or labeled as a gift card or gift certificate.” 15 U.S.C. § 1693l1(a)(2)(D). Nor does this provision appear to apply to release cards. Humphrey v. Stored
Value Cards, 355 F. Supp.3d 638, 643-644 (N.D. Ohio 2019) (holding that release cards are

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costs under the premise that consumers will make informed choices. In the
context of correctional banking, the EFTA’s emphasis on disclosure is an ill
fit, since consumers have no meaningful choice in financial companies.
If a contractor facilitates transfers into or out of an inmate trust account,
the contractor is most likely governed by state-level money transmitter
laws.292 These laws vary greatly by state.293 The Uniform Money Services
Act covers businesses that “receiv[e] money or monetary value for
transmission,”294 but does not apply to a merchant that collects prepayments
for future transactions.295 While the Uniform Act exempts state and local
governments from its coverage, there is no exemption for an agent of a
government296—a feature that should be retained if calls for a federal
money transmitter license are developed.297
The GLBA likely applies to several aspects of correctional banking,
although publicly available evidence suggests that correctional banking
vendors give little thought to complying with the law.298 The provisions
most relevant to correctional banking are the privacy provisions found in
title V of the GLBA. These rules are applicable to entities that engage in
“financial activities,” including transferring and safeguarding money.299 As
a covered entity that is not overseen by a bank regulator, correctional
banking vendors are covered by the GLBA implementing regulations issued
by the FTC.300 The GLBA privacy provisions that can potentially benefit
incarcerated consumers include notification of privacy practices and the
ability to opt out of certain information sharing.301 Covered entities must

not general-use prepaid cards because they are not “marketed to the general public”).
292. But see Prison Pol’y Initiative, supra note 46, at 11, n.54 and accompanying text
(discussing JPay’s unverified allegation that “few” correctional money services business
comply with applicable state regulations).
293. Tunink, supra note 272, at 86, n. 44.
294. Id. at § 102(14).
295. Id. at § 102, cmt. 12 (“[O]nly stored value that consists of a medium of exchange
evidence in electronic record would qualify as stored value for purposes of regulation. A
medium of exchange needs to be something that is widely accepted. Closed-end systems, as
mere bilateral units of account, therefore would be excluded from regulation.”).
296. Id. at § 103(3); see also Id. at § 201(a)(2) (licenses are not required for an agent
of a licensee, but the Act contains no comparable provision for an agent of an exempt entity).
297. E.g., Levitin, supra note 270 at 16 (“A federal money transmitter license, coupled
with some sort of federal insurance for funds held by money transmitters . . . would be a
simple move that would help reduce unnecessary regulatory burdens.”).
298. The one exception is JPay, which briefly mentions GLBA’s data protection
provisions in its privacy policy. Despite this terse reference to the law, JPay does not appear
to address GLBA compliance in its bid proposals, nor is there any mention of the consumer
disclosure and opt-out procedures.
299. 15 U.S.C. § 6809(3); 12 U.S.C. § 1843(k)(4)(A).
300. 16 C.F.R. § 313.1(b).
301. Id. at §§ 313.5 (annual privacy notices), 313.7 (opt-out procedure).

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also develop a data security plan, which must include certain elements
designated by the FTC.302 Although noncompliance cannot be addressed
through private litigation (GLBA does not include a private cause of
action), a consumer who can show injury resulting from a covered entity’s
failure to comply with the GLBA standards, may be able to bring a UDAP
claim on that basis.303
Legal Issues Related to Release Cards
The area of correctional banking that is most clearly covered by the
EFTA is the use of prepaid debit cards (“release cards”) to pay amounts due
to incarcerated people upon their release from custody.304 The cards are
open-loop stored value cards that can be used on the MasterCard payment
network. Although EFTA’s general applicability to release cards has been
unclear in the past, the CFPB clarified matters in its latest amendments to
Regulation E. Effective April 1, 2018, Regulation E’s definition of
“account” includes prepaid accounts,305 and the CFPB’s commentary
explaining the amended rule specifically cites release cards as a type of
prepaid product that is covered by the new definition.306 While the CFPB’s
decision to expressly include release cards within the scope of Regulation E
is an improvement, more work remains to determine the precise extent of
the rights conferred by this change in regulation.
Regulation E prohibits payers from requiring a consumer to use a
certain financial institution (including a specific prepaid card) for receipt of
wages or government benefits.307
During the CFPB’s last EFTA
rulemaking, several advocacy groups requested that the Bureau extend the
compulsory-use prohibition to release cards.308 Although the Bureau
declined to adopt these requested changes, it did note that “to the extent
that . . . prison release cards are used to disburse consumers’ salaries or
government benefits . . . such accounts are already covered by
§ 1005.10(e)(2) and will continue to be so under this final rule.”309 This
“clarification” actually creates some uncertainty, because it does not specify
302. Id. at § 314.4.
303. NAT’L CONSUMER LAW CTR., Fair Credit Reporting § 18.4.1.14 (9th ed. 2017).
304. See generally, Bureau of Consumer Financial Protection, Rules Concerning
Prepaid Accounts Under the Electronic Fund Transfer Act (Regulation E) and the Truth in
Lending Act (Regulation Z), 83 FED. REG. 6364, 6449 (2018).
305. Electronic Fund Transfer Act, 12 C.F.R. § 1005.2(b)(3) (2018).
306. Bureau of Consumer Financial Protection, Prepaid Accounts under the Electronic
Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z),” [hereinafter
Regulation E Amendments] 81 FED. REG. 83934, 83968 (Nov. 22, 2016).
307. Electronic Fund Transfer Act, 12 C.F.R. § 1005.10(e)(2).
308. See RAHER, supra note 68, at 8-9.
309. Regulation E Amendments, supra note 304, at 83985.

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whether a payroll disbursement must be contemporaneous with the
employee’s earning of the underlying compensation. When someone is
released from prison, they might receive disbursement of accumulated
wages earned during the term of their incarceration. To the extent that the
compulsory-use prohibition applies to delayed disbursements of wages,
then Regulation E would prohibit mandatory use of release cards to make
such payments.
Consumer litigation concerning release cards holds promise.
Encouragingly, most courts have held that arbitration provisions in releasecard contracts are unenforceable, given the inability of consumers to
realistically withhold their consent.310 The outlier case, where an arbitration
agreement was held enforceable, is a case from Florida where the district
court found the plaintiff had been given a clear choice of receiving his
funds via debit card or check.311 Claims under the EFTA have met with
mixed success: one court has dismissed a class-action claim alleging that
release cards charge fees in violation of the EFTA’s stored-value card
provisions.312 Another court granted summary judgment in favor of
plaintiffs who allege that compulsory issuance of release cards violates
EFTA’s prohibition on unauthorized issuance of access devices.313 Finally,
the district court for the Western District of Washington has certified a class
of Washington residents asserting violations of both the stored-value card
310. Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2018 WL
2018452, *2 (order denying motions to compel arbitration) (W.D. Wash. May 1, 2018) (“All
contracts, including those to arbitrate disputes, must have mutual assent, and Defendants’
‘contract’ to arbitrate is unenforceable and unconscionable under Washington law.”); Brown
v. Stored Value Cards, Inc., No. 15-cv-01370-MO, 2016 WL 755625, 4 (order denying
motion to compel arbitration) (D. Or. Feb. 25, 2016) (“[Plaintiff] had to take the card and
had to work through the Defendants’ system in order to get her money back. . . . It is not
clear that Plaintiff was presented with a meaningful choice, as such I DENY the Motion to
Compel.”); see also Regan v. Stored Value Cards, Inc., 85 F. Supp.3d 1357 (N.D. Ga. 2015),
aff’d 608 FED. APPX. 895 (11th Cir. 2015) (defendants argued that plaintiff had impliedly
accepted or ratified the cardholder agreement through his use of the release card; court
denied motion to compel arbitration and ordered an evidentiary hearing on whether a
contract had been formed; case settled before evidentiary hearing).
311. Pope v. EZ Card & Kiosk, LLC, No. 15-cv-61046, 2015 WL 5308852 (S.D. Fla.
Sept. 11, 2015).
312. Brown v. Stored Value Cards, Inc., No. 15-cv-01370-MO, 2016 WL 4491836, at
*1-2 (D. Or. Aug. 25, 2018) (dismissing claim that release-card fees are levied in violation
of 15 U.S.C. § 1693l-1(b), based on holding that the stored-value card provision does not
apply to cards that are not “marketed to the general public.” See 12 C.F.R. § 1005.20(b)(4)),
appeal docketed No. 18-35735 (9th Cir. Aug. 31, 2018).
313. Humphrey v. Stored Value Cards, 355 F. Supp.3d 638, 642-643 (N.D. Ohio 2019)
(denying defendant’s motion for summary judgment on claim that unsolicited issuance of
release cards violates 15 U.S.C. § 1693i); Humphrey v. Stored Value Cards, No. 18-cv-1050,
2019 WL 1439771 (N.D. Ohio Apr. 1, 2019) (granting sua sponte summary judgment on
plaintiff’s § 1693i claim, and certifying the decision for interlocutory appeal).

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fee provision and the compulsory-issuance provision (the same court
deferred deferring ruling on a motion to certify a national class pursuing the
same claims).314 Most release-card class-actions have also included general
claims such as Fifth Amendment takings, unjust enrichment, conversion, or
violations of UDAP statutes. These types of claims have frequently
survived a motion to dismiss or led to an advantageous settlement.315
UDAP Statutes
Statutes in every state prohibit the use of unfair or deceptive acts or
practices (“UDAP”) in consumer transactions. In the past, UDAP laws
have been of limited relevance in prison because incarcerated people
engaged in relatively few commercial transactions. With the rise of prison
retailing, however, these laws are becoming increasingly salient. Prisonretail vendors often employ tactics that are deceptive, unfair, or
unconscionable for purposes of consumer protection law. Notably, UDAP
statutes not only allow enforcement by state attorneys general, but
frequently provide a private cause of action as well.316 The private
enforcement option is critically important because attorneys general are
unlikely to aggressively promote the rights of incarcerated people, since
doing so would typically be met with consternation by agencies that are
either clients of the attorney general (in the case of state prison systems) or
at the very least are ideologically aligned with the state’s chief law
enforcement officer (in the case of county jails).
As defined by the FTC, a deceptive practice requires a false or
misleading material claim or omission that is likely to mislead a
consumer.317 Although deception is prohibited under the UDAP statutes in
314. Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2019 WL 2022678
(W.D. Wash. May 8, 2019) (Order on Motion for Class Certification).
315. See Reichert, 2018 WL 2018452, at *3 (denying motion to dismiss plaintiff’s
conversion and unjust enrichment claims, as well as claims under the Takings Clause of the
Fifth Amendment (actionable through § 1983) and the Washington Consumer Protection
Act); Humphrey v. Stored Value Cards, No. 18-cv-1050, 2018 WL 6011052 (N.D. Ohio
Nov. 16, 2018) (certifying class claims for conversion and unjust enrichment); Brown v.
Stored Value Cards, Inc., No. 15-cv-01370-MO, 2016 WL 4491836, at *4-5 (D. Or. Aug.
25, 2016) (denying motion to dismiss plaintiff’s claims for conversion and unjust
enrichment); see generally, First Amended Complaint, Adams v. Cradduck, No. 5:13-cv05074-PKH, ECF No. 6 (W.D. Ark. May 9, 2013), (pleading Fourth and Fourteenth
Amendment violations (actionable through § 1983), conversion, and trespass to chattels
316. See generally, Dee Pridgen, The Dynamic Duo of Consumer Protection: State and
Private Enforcement of Unfair and Deceptive Trade Practices Law, 81 ANTITRUST L.J. 911
(2017).
317. Cliffdale Assocs., Inc., 103 F.T.C. 110, 1984 WL 565319, at *37 (1984) (“[T]he
Commission will find an act or practice deceptive if, first, there is a representation, omission,
or practice that, second, is likely to mislead consumers acting reasonably under the

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most states,318 not all jurisdictions follow the FTC’s definition. In most
states deception is akin to common-law fraud, but with more flexibility (for
example, most states do not require proof of reliance to prove deception).319
Advertisements, promotional materials, and product descriptions published
by prison retailer vendors frequently contain deceptive claims.320 For
example, the suggestion that a computer tablet has functions that it lacks in
reality could be deceptive.321 As could advertised phone rates that do not
adequately disclose or explain fees.322
Not all states recognize claims for unfair or unconscionable practices,
and of the states that do, not all provide consumers with a private cause of
action.323 Under the FTC Act, a practice is unfair if it is “likely to cause
substantial injury to consumers which is not reasonably avoidable by
consumers themselves and not outweighed by countervailing benefits to
consumers or to competition.”324 Other jurisdictions have employed even
more expansive definitions of unfairness which seek to root out all manner
of inequitable conduct.325 Unconscionability is typically defined by
reference to various nonexclusive factors that focus on whether a merchant
took advantage of consumer’s vulnerability or knowingly structured a
transaction in a particularly egregious manner.326 Prison-retail customers
often have actionable claims for unfair or unconscionable practices because
of their inability to avoid injury: prison retailers sell essential goods (food,
circumstances, and third, the representation, omission, or practice is material.”).
318. NAT’L CONSUMER LAW CTR., CONSUMER PROTECTION IN THE STATES: A 50-STATE
EVALUATION OF UNFAIR AND DECEPTIVE PRACTICES LAWS, at 12-14 (Mar. 2018) (48 states
plus D.C. have broadly worded prohibitions on deception).
319. NAT’L CONSUMER LAW CTR., supra note 152 at § 4.2.3.1.
320. See e.g., POM Wonderful v. Fed. Trade Comm’n, 777 F.3d 478, 490 (D.C. Cir.
2015) (“In determining whether an advertisement is deceptive in violation of section 5 of the
FTC Act, the Commission engages in a three-step inquiry, considering: (i) what claims are
conveyed in the ad, (ii) whether those claims are false, misleading, or unsubstantiated, and
(iii) whether the claims are material to prospective consumers.”).
321. See In re Sony PS3 Other OS Litigation, 551 Fed. Appx. 916, 921-922 (9th Cir.
2014) (misleading statements about computer functionality and operating life were
actionable under California False Advertising Law).
322. Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1163-1164 (2000) (company’s
imposition of lawful fees was nonetheless actionable as deceptive practice because company
failed “to make it clear to customers that an avoidable charge is considerably higher than the
retail rate for an item or service, which in the absence of contrary information many would
expect to apply”).
323. NAT’L CONSUMER LAW CTR., supra note 318, at 15 (44 states plus D.C. broadly
prohibit unfairness and/or unconscionability, although 5 of these do not always provide a
private cause of action).
324. 15 U.S.C. § 45(n)(2012).
325. NAT’L CONSUMER LAW CTR., supra note 146, at § 4.3.3.1.
326. Id. § 4.4.2; see also Uniform Consumer Sales Practices Act § 4 (factors
determining unconscionable practices).

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clothing) or services (communication with family) through state-created
monopolies, and if these vendors employ unfair tactics, customers have no
alternative. As one court found, families who pay exorbitant phone rates do
so “out of sheer desperation for contact with their loved ones.”327
Different types of consumer injuries are discussed in the following
subsections. It is first necessary to acknowledge that prison-retail
customers are often severely impaired in their ability to vindicate their legal
rights, due to contractual prohibitions on class adjudication. In many ways,
the enforcement of arbitration provisions and class-adjudication bans in the
prison-retail realm stretches the legal justification of “consent” to its
limits.328 Without diminishing the impact of arbitration provisions, it is
nonetheless important to acknowledge and explore the frequent facial
violations of UDAP statutes, in the form of unreasonable prices, oppressive
contract terms, and efforts to evade sellers’ duties under article 2 of the
Uniform Commercial Code.
Prices
Consumers who challenge prices should take care to highlight the ways
in which prison-retail pricing resembles practices that have previously
formed the basis for valid UDAP claims. Specifically, practices such as use
of monopoly power to extract excessive fees,329 or paying kickbacks to the
issuer of a government contract.330 Some jurisdictions may recognize
unreasonably high prices as unconscionable in and of themselves.331 Other

327. James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3727371, at *2 (D.N.J.
Aug. 6, 2018) (opinion re: motion to certify class).
328. See Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2019 WL
2022678, at *5 (W.D. Wash. May 8, 2019) (“According to Defendants [correctional banking
vendors], voluntary deposits necessarily subject the inmate to the facility’s terms and
conditions for distribution of the funds [including arbitration provision]. But Defendants
gloss over the fact that inmates have no other means of using funds while in prison, making
the ‘voluntariness’ of a deposit not so different from when cash is confiscated.”).
329. E.g. Ford v. ChartOne, Inc., 908 A.2d 72 (D.C. App. 2006) (consumer pleaded a
valid claim for unconscionably high prices under the D.C. Consumer Protection Procedures
Act, where plaintiff’s only way to obtain copies of his own medical records was to pay $6.36
per page to contractor selected by the medical provider).
330. Stalker v. MBS Direct, No. 10-11355, 2011 WL 797981, at *6 (E.D. Mich. Mar.
1, 2011) (plaintiffs properly stated a claim under the Michigan Consumer Protection Act by
alleging that 4-11% commissions that book vendor paid to school districts unreasonably
inflated cost of textbooks sold to students); class cert. denied 2012 WL 6642518 (E.D. Mich.
Dec. 20, 2012).
331. Via Christi Regional Med. Ctr. v. Reed, 298 Kan. 503, 527-528 (2013) (hospital’s
use of superior bargaining power to charge inflated prices was actionable; the fact that such
pricing was common in the industry held not to be a defense); Kugler v. Romain, 58 N.J.
522, 545-547 (1971) (defendant’s targeting low-income consumers with sales of “practically

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jurisdictions may require some type of independent wrongdoing in addition
to unreasonably high prices.332
In a class action, a finding of
unconscionable prices need not be made customer-by-customer, but rather
can be based on judicial comparison of end-user prices to the seller’s
average costs.333 In addition to base prices, transaction fees may be unfair
or deceptive, depending on how they are portrayed and what (if anything)
the consumer receives in return for payment of the fee.334
In the context of prison-retailing, consumers have used UDAP statutes
to challenge inflated monopoly prices charged by ICS carriers. For
example, plaintiffs in Arkansas challenged Securus’s intrastate rates under
that state’s Deceptive Trade Practices Act.335 The district court concluded
that plaintiffs’ allegations that Securus “improperly exploit[ed] economic
leverage resulting from exclusive-provider contracts” formed the basis for
an actionable claim of unconscionability.336 In a still-pending New Jersey
class action, the district court denied GTL’s motion to dismiss claims under
the New Jersey Consumer Fraud Act, holding that plaintiffs had stated a
claim of unconscionability based on the anticompetitive way in which rates
were imposed upon a vulnerable population (further holding that a separate
act of deception was not required).337 Most recently, the district court for

worthless” educational materials for two-and-a-half times a reasonable market price was
unconscionable).
332. E.g., Galvan v. Northwest Memorial Hosp., 382 Ill. App.3d 259, 265 (2008)
(“Charging an unconscionably high price, by itself, is generally insufficient to establish a claim
[under the Illinois Consumer Fraud and Deceptive Business Practice Act] for unfairness.
Instead, ‘the defendant’s conduct must [also] violate public policy, be so oppressive as to leave
the consumer with little alternative except to submit to it, and injure the consumer.’” (citation
omitted)); Hatke v. Heartland Homecare Servs., No. 90,117, 2003 WL 22283161 (Kan. App.
Oct. 3, 2003) (per curiam) (high price not actionable under Kansas Consumer Protection Act
absent deceptive bargaining conduct or unequal bargaining power).
333. ChartOne, 908 A.2d at 90-92.
334. Byler v. Deluxe Corp., 222 F.Supp.3d 885 (S.D. Cal. 2016) (plaintiffs adequately
pled deceptive trade practice under California, Illinois, Missouri, and Massachusetts law,
based on company’s shipping fees (ranging from $8 to $49.60 per order), which bore no
reasonable relationship to company’s actual shipping costs); Martin v. Heinold Commodities,
163 Ill.2d 33, 50-52 (broker’s imposition of a “foreign service fee” was deceptive because it
inaccurately implied that the fee was charged to recover costs, when in fact it was simply an
additional sales commission).
335. Antoon v. Securus Tech., No. 5:15-cv-5008, 2017 WL 2124466 (W.D. Ark. May
15, 2017).
336. Id. at *6.
337. James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3736478, at *7 (D.N.J.
Aug. 6, 2018) (Unconscionability claim is “not solely about excessive rates, but also about
the manner in which those rates were established—through site commissions and ancillary
fees. From the end user’s perspective, there was no marketplace. GTL enjoyed a monopoly
over individuals held captive by a government agency.” (citation and internal quotation mark
omitted; emphasis in original)).

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Massachusetts denied Securus’s attempt to dismiss a class action claim
under Massachusetts consumer protection law, finding that the plaintiffs
were families of limited means who had no reasonable alternative but to pay
prices that Securus had inflated in order to pay commissions to the
sheriff.338
Terms and Conditions
Adhesive contracts with oppressive terms are often actionable for either
of two interrelated reasons: complex contract language can deceive
consumers into misunderstanding the terms of a bargain, and an inability to
negotiate terms leaves consumers with no meaningful choice.339 These dual
concerns are particularly acute in the prison-retail setting, where terms and
conditions are unusually oppressive and merchants enjoy a legal monopoly.
Terms and conditions that are difficult to understand may be deceptive,
while terms that are overwhelmingly exculpatory may be actionable as
unfair or unconscionable.340
Deceptive practices in prison-retailing can include advertising services
as achieving a specific purpose (e.g., communicating with a loved one) but
forcing consumers to assent to contract terms that excuse the vendor from
actually providing the advertised service.341 The same goes for goods that
are advertised as fulfilling specific functions, but which come with terms
stating that the product is not warranted to operate without failure.342 Other
problematic terms and conditions include purported waivers of duties
imposed by law. For example, JPay’s terms of service for money transfers
state that JPay “will not be liable for a Payment sent to the incorrect inmate
account.”343 This blanket exculpatory term ignores the numerous situations
338. Pearson v. Hodgson, No. 18-cv-11130-IT, 2018 WL 6697682, *8-9 (D. Mass.
Dec. 20, 2018). The plaintiffs’ theory in this case relies on an earlier state-court ruling,
Souza v. Sheriff of Bristol County, 455 Mass. 573 (2010), which held sheriffs may only
impose and collect fees that are specifically authorized by statute. The Pearson plaintiffs
argue that the sheriff has violated Souza by collecting fees (site commissions) that are not
authorized by statute, and that Securus has violated Massachusetts’ UDAP statute by
assisting the sheriff in this unlawful activity.
339. NAT’L CONSUMER LAW CTR., supra note 146 at § 4.3.2.3.4.
340. E.g., Barrett-O’Neill v. Lalo, LLC, 171 F.Supp.3d 725, 740-741 (S.D. Ohio 2016)
(requiring a consumer to enter into a “substantially one-sided transaction” can constitute
unconscionable practice under Ohio Consumer Sales Practices Act); Goodwin v. Hole No. 4,
LLC, No. 2:06-cv-679, 2006 WL 3327990, *8 (D. Utah Nov. 15, 2006) (contract that gave
seller the “unilateral ability to defeat the contract (and the [customers]’ justified
expectations) rings of substantive unconscionability”).
341. See Jpay, supra note 138 and accompanying text.
342. Id.
343. JPay, Inc., “Payment Terms of Service” ¶ 2, https://www.jpay.com/LegalAgree
mentsOut.aspx (accessed Jan. 7, 2019).

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in which JPay could be liable for an erroneous transfer due to its own
negligence.344 JPay also claims (perhaps as part of its efforts to redirect
customers to high-fee electronic payment channels) that it is “not
responsible” for money orders that it receives at its designated mailing
address, but which do not reach the intended recipient of funds.345 This
provision is not only unfair, but is likely unenforceable as an attempt to
evade the common-law duties of a bailee.346
Vendors’ privacy policies also contain troublesome provisions,
especially when it comes to law-enforcement use of customer data.
Securus’s Threads product collects data from numerous sources for
distribution to anyone “connected to” a public law enforcement agency or
private investigative firm.347 Securus apparently has some awareness that
such data sharing implicates privacy laws, because law enforcement
customers that subscribe to Threads must sign a form contract promising to
“comply with all [applicable] privacy, consumer protection, marketing, and
data security laws and government guidelines.”348 Yet Securus’s customerfacing terms of service require customers to “agree that [communications
data] will be . . . assigned, sold, transferred and distributed by [law
enforcement]” and customers must further “agree that Securus assumes no
responsibility for the activities, omissions or other conduct of any member
of Law Enforcement.”349 In other words, Securus uses form contracts to
344. Most obviously, a customer paying by credit card could have valid grounds to
initiate a chargeback if JPay negligently misdirected deposited funds. See MasterCard,
Chargeback Guide 47, 222 (May 1, 2018) (description of chargeback message reason codes
4853, 53, and 79).
345. JPay, supra note 138 at ¶ 7.
346. JPay’s terms and conditions state that this disclaimer is designed for situations
where “there is a problem with the deposit.” Id. Although a money transfer is not a
bailment, in the case of an attempted payment by negotiable instrument that cannot be
consummated, the recipient most likely holds the instrument as a constructive bailee. See
Bayview Loan Servicing v. CWCapital Asset Management (In re Silver Sands R.V. Resort),
636 FED. APPX. 950, 952 (9th Cir. 2016) (recipient of overpayment held excess funds as
constructive bailee); see also 8A Am. Jur. 2d Bailments § 12 (2009) (“A ‘constructive
bailment’ or ‘involuntary bailment’ arises where . . . a person has lawfully acquired the
possession of personal property of another and holds it under circumstances whereby he or
she should, on principles of justice, keep it safely and restore it or deliver it to the owner.”).
Although parties to a bailment may alter their respective rights and obligations by contract,
attempts to eliminate a bailee’s liability for loss arising from its own misconduct are
typically held void as against public policy. Id. § 86 (2009).
347. See generally, O’Neil, supra note 168, Price, supra note 169, and Securus, supra
note 175.
348. Master Services Agreement, supra note 120, at 5, ¶ 1. The contract also requires
agencies to agree to implement eight specific practices, including restricting access to
properly authorized employees, using personal information only for lawful purposes, and
limiting the further dissemination of personal information. Id. ¶ 2.
349. Securus T&C, supra note 117, Privacy Policy §§ II(J) & (K).

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require law enforcement to observe to certain laws, while simultaneously
requiring the effected consumers to waive the protections of those same
laws. Because the agency-facing contract evidences Securus’s knowledge
of applicable privacy laws, the company’s consumer-facing terms seem
particularly vulnerable to a challenge as unfair or unconscionable.
Finally, although it would be novel, a UDAP claim could be brought in
cases where vendors have made materially different representations and
warranties to facilities versus consumers. As an example, in a typical
contract for video visitation, Securus agrees to provide functioning video
service, with specified features, and subject to detailed technical
specifications.350 Yet, the customer-facing terms and conditions for the
same service provide that Securus does not warrant that the system will
work “properly, completely, or at all.”351 Such a stark disparity could form
the basis for a claim of unfairness in that the disparity between the vendorfacility contract and the vendor-customer contract reflects the extent to
which vendors use their disproportionate power to craft one-sided
consumer-facing contracts.
Sales of Goods
Sales of goods such as food, toiletries, clothing, and electronic
hardware (including tablets) implicate both UDAP statutes and consumers’
rights under article 2 of the Uniform Commercial Code (“UCC”). The
rights of buyers regarding defective goods is likely to become more relevant
to the extent that computer tablets of questionable quality become more
common.352 Because prison retailers tend to offer the most parsimonious
express warranties imaginable, consumers will often have to rely on the
implied warranty of merchantability available under UCC article 2.353 The
implied warranty of fitness for a particular purpose354 may also arise in
situations where a seller encourages consumer misconceptions, such as
leading customers to believe that a tablet performs a specific function, (e.g.,
accessing educational content), when in fact it does not.355
Prison retailers routinely impose terms and conditions that misleadingly
purport to “disclaim” all implied warranties.356 The enforceability of such a
350. E.g., MASTER SERVICES AGREEMENT, supra note 120, at Exh. A §§ 29 and 33.
351. See Serucus T&C, supra note 117.
352. Although not a consumer-law issue, one tablet user in South Dakota has raised the
ongoing malfunctioning of computer tablets as a Sixth Amendment issue, since that state
removed prison law libraries and replaced it with a tablet-based Lexis Nexis app.
353. U.C.C. § 2-314(AM LAW. INST. 2017).
354. U.C.C. § 2-315(AM LAW. INST. 2017).
355. See supra notes 157-158 and accompanying text.
356. E.g., UNION SUPPLY GROUP, TERMS OF USE (2018) https://californiainmatepack

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provision is questionable. In addition, if a merchant does use a broad
disclaimer, they are required to advise consumers that they may have
greater rights under state law—a requirement that is routinely ignored by
prison retailers.357 Even if a disclaimer of implied warranty is allowed
under state law, it may be unenforceable under the Magnuson-Moss
Warranty Act,358 which prohibits a supplier from disclaiming an implied
warranty if it “makes any written warranty to the consumer with respect to
such consumer product.”359 Given the FTC’s broad definition of a “written
warranty,” many goods sold in a commissary will fall under this
provision.360
Although merchants are generally able to limit the duration of
warranties, prison retailers frequently use warranty periods that are so short
or otherwise burdensome that they may be actionable either under either the
Magnuson-Moss Act361 or the UCC’s “manifestly unreasonable”
standard.362 For example, Union Supply Company sells computer tablets
that are covered by a three-month warranty.363 The procedure for invoking
one’s warranty rights under the Union Supply policy is also troublesome. If
a defective item is returned for a warranty claim, it must be accompanied by

age.com/Catalog/MenuCatalogPages/ManageStaticPage.aspx?pageid=TermsOfUse
(disclaiming “any and all warranties, express or implied, for any merchandise offered”).
357. 16 C.F.R. § 701.3(a)(7-9)(2012).
358. Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Pub. L.
No. 93-637, 88 Stat. 2183, (codified as 15 U.S.C. § 2301, et seq. (2012)).
359. 15 U.S.C. § 2308(a)(2012). A “supplier” is broadly defined in the MagnusonMoss Act to mean “any person engaged in the business of making a consumer product
directly or indirectly available to consumers.” 15 U.S.C. § 2301(4)(2012).
360. 16 C.F.R. § 701.1(c)(1)(2012) (written warranty includes “[a]ny written
affirmation of fact or written promise made in connection with the sale of a consumer
product by a supplier to a buyer which relates to the nature of the material or workmanship
and affirms or promises that such material or workmanship is defect free or will meet a
specified level of performance over a specified period of time.”).
361. 15 U.S.C. §§ 2308(b)(2012) (seller may limit an implied warranty only if the
duration is reasonable and the limitation itself is conscionable) and 2310(d)(2012) (private
cause of action).
362. U.C.C. § 1-302(b)(AM LAW. INST. 2017); NAT’L CONSUMER LAW CTR., supra
note Error! Bookmark not defined. at § 7.7.4.6 (parties may vary terms such as a warranty
duration, by contract, but such variations may not be manifestly unreasonable).
363. See Securus T&C, supra note 117 and accompanying text. The warranty period is
technically 180 days, but after 60 days, a repair fee is imposed that may prevent many
customers from effectively making warranty claims. Notably, although the company’s
website terms include a description of the warranty coverage, it also states that complete
warranty terms are available only in the tablet package, a practice that likely violates of the
Magnuson-Moss Act. 15 U.S.C. § 2302(b)(1)(A)(2012) (requiring warranty terms to be
“made available to the consumer (or prospective consumer) prior to the sale of the product to
him.”).

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an original receipt and all of the original accessories and packaging.364 This
could be a consumer trap even in a regular free-world transaction, but is
particularly onerous for someone in prison, where customers may not even
be allowed to keep the packaging.365 After imposing intricate and
burdensome rules for warranty claims, Union Supply claims to reserve to
itself the sole discretion to determine whether a returned item is eligible for
warranty service. If it determines a return is ineligible, the company has the
sole discretion to decide whether or not to return the item to its owner.366
The use of oppressive warranty terms is not unique to Union Supply.
The warranty for GTL’s tablets lasts twelve months, but repairs can take up
to one month to complete (or “21 working days”), and GTL has the sole
discretion to determine whether “conditions of the warranty are met.”367 If
GTL determines the product is not eligible, the customer has no appeal
rights, does not receive the original device back, and his only recourse is “to
purchase a new tablet.”368
Tactics that render warranty coverage illusory can be actionable as
either a deceptive or an unfair practice.369 In addition, the Magnuson-Moss
Act allows the FTC or the Attorney General to sue when “the terms and
conditions of [a written warranty] so limit its scope and application as to
deceive a reasonable individual;”370 there is not, however, a private cause of
action under this provision.

364. UNION SUPPLY GROUP, supra note 143.
365. The Union Supply tablets are specifically marketed for people incarcerated in the
California prison system, which limits personal property to items on a preapproved list (a list
that does not include used packaging) and caps the volume of allowable possessions at six
cubic feet per person. Cal. Code Regs. tit. 15, § 3190(e); Calif. Dept. of Corr. and
Rehabilitation, Inmate Property Matrix (rev. Apr. 1, 2014), http://www.cdr.ca.gov/reg
ulations/wp-content/uploads/sites/171/2019/08/APP-Rev-4-1-14.pdf?label=Authorized%20
Personal%20Property%20Schedule%(APPS)%20(Rev.%204/1/14)&from=https://www.cdcr.
ca.gov/regulations/adult-operations/dom-appendices.
366. UNION SUPPLY GROUP, supra note 143.
367. PENN.-GTL CONTRACT, supra note 48, appx. G at Requirement #103. Even
though the tablets are warranted for twelve months, the batteries (which are presumably a
critical component) are only warranted to last three months. Id. at p. 415 (GTL Genesis 116PA spec sheet).
368. Id. at Requirement #103.
369. See Roelle v. Orkin Exterminating Co., No. 00AP-14, 2000 WL 1664865, *6-7
(Ohio Ct. App. Nov. 7, 2000) (guarantee that promises effective services but is negated by
other components of the same contract is a deceptive practice under the Ohio Consumer
Sales Practices Act).
370. 15 U.S.C. § 2310(c)(2012).

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Antitrust
Because prison retailers are able to use their market power to inflict
harm on consumers, many industry trade practices are potentially subject to
a private action under section 4 of the Clayton Act.371 Specific aspects of
prison-retailing that are relevant to such claims include vendor exercise of
monopoly power, the oligopoly in the correctional telecommunications
market, and collusion between vendors and facilities in setting prices. Due
to the specialized nature of antitrust litigation, this article does not explore
such actions in greater depth; however, recent developments in public
enforcement do warrant a brief mention.
ICS carrier Inmate Calling Solutions, LLC (doing business as
ICSolutions) is a wholly owned subsidiary of commissary company Access
Corrections. ICSolutions is the third largest ICS carrier in the market,372
and claims to have a captive customer base of approximately 268,000
incarcerated people in over 400 facilities.373 In June 2018, Securus filed an
application under § 214 of the Communications Act, seeking FCC
permission to acquire ICSolutions.374 Moody’s Investors Service noted that
the acquisition was “costly” for Securus, but it would “eliminate[] an
aggressive competitor in the smaller facility space comprised of local and
county jails.” 375 For this reason, Moody’s reaffirmed Securus’s bond
rating, citing the company’s “small scale, niche industry focus, aggressive
financial policy, and strong competitive pressures in a largely duopolistic
and mature end market.”376

371. 15 U.S.C. § 15(2012).
372. Wagner, supra note 56, lists ICSolutions’ market share as fourth, behind
CenturyLink. But CenturyLink is likely not a true independent competitor in the ICS
marketplace.
CenturyLink, an incumbent local exchange carrier with operations
concentrated in western and midwestern states, is a nominal holder of many ICS contracts,
but its bid proposals indicate that CenturyLink simply provides transmission lines, while ICS
carriers such as Securus or GTL are responsible for all operational details, such as software,
billing functions, and customer support. See e.g., CenturyLink, Response to Georgia Dept.
of Corrections Solicitation No. 46700-GDC0000669, attch. K (Jun. 9, 2015) (on file with
author).
373. ICSolutions, Response to Request for Proposals for Providing Inmate
Communication Services for the Harrison County Jail Facilities, Gulfport, Mississippi, at 1
(July 28, 2017) (on file with author).
374. Joint Application, In the Matter of Joint Application of TKC Holdings,
ICSolutions, and Securus Technologies for Grant of Authority, WC Dkt. No. 18-193 (June
12, 2018).
375. MOODY’S SAYS SECURUS’ RATINGS UNCHANGED FOLLOWING ADD-ON TO TERM
LOAN,
https://www.moodys.com/research/Moodys-says-Securus-ratings-unchanged-follow
ing-add-on-to-term—PR_383221 (May 7, 2018) (emphasis added).
376. Id.

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The acquisition was challenged by the Wright petitioners and others.377
After an extended review by the FCC and the U.S. Department of Justice,
Securus and ICS terminated the transaction.378 Although the abandonment
of the merger was announced as a voluntary action by the parties, the public
statement of FCC Chairman Pai indicates that the Commission was
genuinely skeptical about the deal.379
The demise of the ICSolutions acquisition indicates that regulators are
aware of the acute consolidation within the ICS marketplace and the
resulting lack of competition. Yet even with this positive development, it
may not be realistic to expect a resurgence of competition in a market that
has become consistently less robust over the span of several decades.
Policy Recommendations
Although prison-retail customers have some protections, as discussed in
the previous section, these scattered ex post remedies are inefficient and
less-than-comprehensive. Meaningful protection must come through a
deliberately designed system of ex ante regulation that respects legitimate
security needs while vigorously protecting the interests of incarcerated
people as consumers.
Central to the current lack of consumer protections is the failure of any
government agency to take responsibility for broadly protecting the rights
of incarcerated people and their families as captive customers. Time and
time again, concerns about abusive monopolist business practices are
dismissed by policymakers who claim that correctional agencies take these
matters into account when awarding exclusive vendor contracts. This is not
a sufficient answer, given the agencies’ divided loyalties.
This section explores proactive actions that legislatures, regulatory agencies,
and correctional facilities can take. Because the majority of incarcerated people
are held in state or local facilities, this section begins with state- and local-level
policy proposals and then considers potential federal action.
377. Aleks Kajstura, “Families and advocates ask FCC to stop phone giant’s further
expansion,” PRISON POL’Y INITIATIVE BLOG (July 17, 2018), https://www.prisonpolicy.
org/blog/2018/07/17/securus-merger/.
378. Press Release, U.S. Dep’t of Just., Antitrust Div., Securus Technologies
Abandons Proposed Acquisition of Inmate Calling Solutions after Justice Department and
the Federal Communications Commission Informed Parties of Concerns (Apr. 3, 2019),
https://www.justice.gov/opa/pr/securus-technologies-abandons-proposed-acquisition-inmatecalling-solutions-after-justice.
379. Press Release, Fed. Comm’cns Comm., Chairman Pai Statement on Decision by
Inmate Calling Services Providers to Withdraw Merger Application (Apr. 2, 2019),
https://docs.fcc.gov/public/attachments/DOC-356836A1.pdf (“FCC staff concluded that this
deal posed significant competitive concerns and would not be in the public interest. I
agree.”).

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State and Local Governments
The basic problem of prison retailing can be summarized as follows:
growing prison populations have led to unsustainable correctional budgets,
which has led agencies to seek out so-called “no cost” contracts (in reality,
this simply means shifting costs from the public sector to incarcerated
people). The ultimate solution to this quandary is for states to reduce the
use of incarceration and acknowledge that the state must assume the
financial costs when it chooses to incarcerate people. In the absence of this
large-scale normative change, consumer rights can be protected through
reforms that are more incremental, but which nonetheless creatively change
the ways in which society addresses the burdens of incarceration.
Reimagine Procurement Practices
Opening up aspects of the procurement process to oversight is one part
of a multilayered approach to addressing the problematic aspects of prison
retailing.380 This can be accomplished through numerous changes, ranging
from major overhauls to minor tweaks.
To begin, families and
representatives of incarcerated people must have a meaningful role in the
procurement process.
Incarcerated people and their families are
increasingly well organized, and as the experience of the Wright petitioners
teaches, this is a constituency that is entirely qualified to bring valuable
insights to complex regulatory matters. Accordingly, legislatures should
require that any panel of reviewers evaluating bids for prison-retail
contracts must include a qualified delegate from an organization that
represents the interests of people incarcerated by the agency that has
solicited bids.381
Corrections agencies should also take the lead by reforming
procurement practices to address the unnecessarily abusive practices that
are common in the industry. There are numerous targeted reforms that
agencies could achieve simply by modifying contracts or the terms of
requests for proposals. For example, agencies should:

380. See Gibbons and Katzenbach, supra note 84, at 78 (The key, many people told the
Commission [on Safety and Abuse in America’s Prisons], is never to rely on any single
mechanism of oversight and accountability, but rather to take what Professor Michele Deitch
calls a ‘layered approach.’”).
381. Allowing advocates to sit on procurement committees is no more revolutionary
than the numerous insurance regulatory systems that allow intervention of consumer
advocates in ratemaking proceedings. See Daniel Schwarcz, Preventing Capture through
Consumer Empowerment Programs; Some Evidence from Insurance Regulation, in
PREVENTING REGULATORY CAPTURE: SPECIAL INTEREST INFLUENCE AND HOW TO LIMIT IT
365 (Daniel Carpenter & David A. Moss, eds., 2014).

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Protect consumers from the potentially disastrous effects of a moneytransmitter insolvency by requiring vendors to post a surety bond or hold
prepaid revenue in a segregated account that cannot be pledged as
collateral.
Refuse to consider or enter into bundled contracts.
Allow all incarcerated customers to designate a third party
representative (e.g., a trusted family member) for purposes of accessing
account data and interacting with vendor customer-service staff.382
Require all vendors providing financial services to formulate a data
protection plan and comply with the consumer data provisions of the
GLBA.
Prohibit vendors from disclaiming the implied warranties of
merchantability and fitness for a particular purpose.
Require public posting (accessible both in- and outside of prison) of all
vendor policies and fees, as well as disclosure of any compensation
received by the correctional agency.
Prohibit forfeiture of prepayments and require that all unused
prepayments be refunded upon a customer’s release from custody. If any
refund cannot be completed, the credit balance should be administered
under the state’s unclaimed property law.
Foster Competition
Part of the reason why retail offerings like commissary and telephone
service are delivered through monopoly contracts is that correctional
facilities want tight control over the security practices of vendors. In the
case of digital content delivered via tablets, the security-related justification
for a monopoly provider is not particularly compelling. Companies like
Apple and Spotify have spent considerable resources amassing enormous
catalogs of music, and developing sophisticated content-delivery platforms.
Moreover, these companies have invested substantial money (almost
assuredly more than has been invested by prison-retail firms) in designing a
secure network that can prevent malicious misuse. Any computer network
used by incarcerated people must be established by the facility, subject to
necessary security features. The costs of establishing that network can be
funded through correctional budgets or (if necessary) through reasonable
user fees. But providing software and content that operates on this closed
382. This third-party authorization system can be modeled after the CFPB’s
“Consumer Protection Principles: Consumer-Authorized Financial Data Sharing and
Aggregation” (Oct. 18, 2017), http://files.consumerfinance.gov/f/documents/cfpb_consumerprotection-principles_data-aggregation.pdf (“Consumers are generally able to authorize
trusted third parties to obtain [account-related] information from account providers to use on
behalf of consumers, for consumer benefit, and in a safe manner.”).

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network need not be the exclusive province of a monopoly provider. Freeworld platforms can be modified and offered in prisons, allowing customers
to select providers in a truly competitive market. There are two reasonable
security concerns about allowing such free-world digital platforms in a
correctional facility: (1) potentially objectionable content in books, music,
or other digital material,383 and (2) certain features like user reviews, which
could be used to facilitate unauthorized communications. Correctional
administrators who are truly committed to innovation could work with
technical experts on modifying existing platforms to address these
concerns. For example, if facilities want to control the types of songs
available (due to violent or sexual content), then how could various
corrections departments collaboratively curate and share a database of
acceptable songs, while simultaneously providing users explanations of
why certain music has been censored? Or if prison administrators balk at
iTunes because user reviews allow communication with the outside world,
could the software be modified to disable to the review feature for
incarcerated users?
In the case of tangible goods, security concerns are more
understandable, but some level of competition is nonetheless possible. In
fact, the ability to introduce competition comes from an unlikely source.
There is a robust national network of independent community organizations
that send free books to incarcerated people.384 Prison systems sometimes
attempt to squelch these sources of donated books by prohibiting
incarcerated people from receiving mailed books unless they come from
one of a small number of approved vendors.385 While approved-vendor
policies have rightly been criticized (in the context of book shipments) as
needless censorship, such policies serve as a key piece of evidence when it
comes to confronting the monopoly of prison commissaries. Prison
administrators, when it suits their purpose, admit that the supply chain of a
national company like Amazon or Barnes and Noble is secure enough to
serve incarcerated people (supplemented, of course, by screening in the
facility mail room). If the supply chain is secure enough in the case of

383. Even though it is generally obvious that prisons should have the power to screen
out objectionable content, prison officials have repeatedly proven themselves unreasonably
overzealous in exercising this power. Perhaps the most notorious example are the numerous
books which have been prohibited in prisons for implausible, nonsensical, or obviously
pretextual grounds. See Banned Books List, BOOKS TO PRISONERS, http://www.booksto
prisoners.net/banned-book-lists/ (last visited Jan. 6, 2019) (collecting examples). This is a
real problem, but one that is simply beyond the scope of this paper.
384. See, e.g., Lucy Parson Center, National Prisoner Resource List, PRISON BOOK
PROGRAM (Feb. 2019), https://prisonbookprogram.org/wp-content/uploads/NPRL.pdf.
385. Christopher Zoukis, “Censorship in Prisons and Jails: A War on the Written
Word,” PRISON LEGAL NEWS, v.29, n.12, 1, at 6-7 (Dec. 2018).

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books, then family members should be allowed to use the same vendors to
purchase toothpaste, batteries, or socks for incarcerated loved ones. Such
an arrangement would require some kind of coordination between facilities
and approved vendors (most notably to determine what inventory items are
allowed under facility rules), but the logistics should not be insurmountably
difficult.
Conduct Rulemaking Proceedings to Protect Consumers
Absent congressional action, some subset of telecommunications
services will remain under the supervision of state public utilities
commissions (“PUCs”). So long as this regulatory dichotomy continues, it
is critical for PUCs to ensure reasonable ICS rates. Intrastate rate
regulation is particularly important for people incarcerated in local jails,
because they are generally more likely to make local calls (to family or
counsel in the vicinity who can provide immediate help) and do not have
the ability to use VoIP routing to obtain the most favorable rates.386 When
setting rates, PUCs must obtain carriers’ comprehensive financial
information in order to prevent carrier manipulation of cost data
UDAP statutes are another critical protection that can extend to all
types of prison retailing, not just telecommunications. Because these
statutes prohibit very broad categories of behavior, many states allow
attorneys general or consumer-protection agencies to promulgate rules
defining certain unfair or deceptive practices in greater detail.387 UDAP
regulations could provide greater clarity by addressing issues specific to
prison retailing. The first issue to address is arbitration provisions.
Because prison-retail consumers have no ability to choose sellers, their
consent to an arbitration clause is not truly voluntary. To mitigate this
situation, states should issue regulations making it an unfair trade practice
for any prison retailer doing business in that state to impose mandatory
arbitration or prohibit class adjudication. States should also conduct other
UDAP rulemakings after surveying incarcerated people and their families
and identifying the problems most in need of remediation.
Provide Protection for Trust Account Balances
As discussed previously, families will sometimes utilize prepayment
options with unfair terms in an effort to avoid depositing funds into a trust
account where they can be subject to mandatory deductions. Some of these
deductions can take the form of irregular seizures, such as a writ of
386. See generally GTL, supra notes 223.
387. NAT’L CONSUMER LAW CTR., supra note 146 at § 3.4.4.2.

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garnishment. Other jurisdictions have made mandatory deductions more
systematic. For example, a 2017 Oregon law directs the Department of
Corrections to deduct 15% of all incoming funds (including wages or gifts),
to pay any outstanding compensatory finds, restitution, court-appointed
attorney fees, child support, or civil judgments.388 To illustrate the impacts
of this law, consider a hypothetical mother who wishes to support her son in
the Oregon prison system. If, every month, the mother wants her son to
have enough money to purchase five prepaid mailing envelopes, a months’
supply of dental floss, deodorant, toothpaste, a bar of soap, and enough to
pay for two 20-minute phone calls, she would need to send $19.88 per
month.389 The impact of the new law is that she now needs to send $22.86
per month for her son to have the same buying power. The increased
monthly deposit also increases the applicable transaction fee (charged by
Securus subsidiary JPay) by $3 per month.390 Between increased transfer
amounts and applicable fees, the mother’s increased costs would be
approximately $72 per year.
Defenders of such mandatory deductions are quick to emphasize the
importance of paying court-ordered financial obligations. But these
arguments miss the fact that all states have enacted statutory exemptions for
judgment debtors based on the realization that everyone needs minimal
financial resources to live, and federal law generally limits the maximum
wage garnishments to the lesser of 25% of disposable earnings or the
amount by which disposable wages exceed thirty-times the federal
minimum wage.391
One simple way that states could protect incarcerated people and their
families from predatory prepayment schemes would be to exempt a
reasonable amount of monthly trust account deposits from seizure under
mandatory deduction laws. Despite the predictable counter-arguments that
would come from proponents of zero-sum criminal justice, such a policy
need not diminish the importance of repaying court-ordered debts. Rather,
just like a wage-garnishment exemption, it is an acknowledgment that
people in prison are expected to pay for basic necessities, and to do so, they
must have some degree of protection from involuntary payments.

388. Or. Rev. Stat. § 423.105.
389. The cost of the phone call is based on applicable prices published by GTL
subsidiary Telmate, at http://www.gettingout.com (accessed Oct. 21, 2019). All other items
are based on commissary price list provided by the Oregon Department of Corrections (on
file with author).
390. Based on transfer confirmation screens at http://www.jpay.com (on file with
author).
391. 15 U.S.C. § 1673(a)(2012).

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Develop Independent ADR Systems
Another important issue that should be seriously addressed in prisonretail systems is the existence and structure of customer dispute resolution
processes. A creative form of alternative dispute resolution (“ADR”) in
prison retailing is sorely needed. Vendors do not operate in a competitive
market and therefore have little incentive to seriously respond to consumer
complaints. Meanwhile, disputes in prisons are typically funneled to
grievance systems which are notoriously biased, unfair, and ineffective.392
Often the problems with internal grievance systems can be traced to
staff skepticism regarding the validity of complaints coming from
incarcerated people. In some ways, this is the correctional system’s version
of Liebeck v. McDonald’s Restaurants (the “McDonald’s hot coffee case”),
a highly publicized case that has led to many strongly-held opinions based
on misinformation.393 The equivalent case in the correctional sector was a
real lawsuit (many details of which have been lost to the sands of time)
involving a purchase of peanut butter from a prison commissary. Senator
Bob Dole described it as a suit over “being served chunky peanut butter
instead of the creamy variety” during Senate debate of the Prison Litigation
Reform Act.394 The case became a widely-cited example of frivolous prison
litigation, and has become a shorthand method of dismissing the complaints
of incarcerated people. Yet when Chief Circuit Judge Jon O. Newman
unearthed the original complaint from the case, he discovered that Senator
Dole’s characterization was not entirely accurate: yes, the plaintiff had
received the incorrect type of peanut butter, but he filed the suit because he
returned the incorrect jar and never received the refund he was promised.395
As Judge Newman remarked, the $2.50 cost of the peanut butter may seem
trivial to some, “but out of a prisoner’s commissary account, it is not a
trivial loss, and it was for loss of those funds that the prisoner sued.”396
The mythology of the peanut butter case is representative of many
392. See e.g., Prison Just. League, A “Rigged System”: How the Texas Grievance
System Fails Prisoners and the Public, PRISON JUST. LEAGUE 1, 5 (2017) (54% of survey
respondents reported never having a grievance satisfactorily resolved during their time in
Texas prison, 91% reported that the system was not effective); Confronting Confinement,
supra note 84 at 93 (“Nearly every prison and most jails have a procedure for receiving
prisoners’ grievances. However, the Commission heard that many are ineffective.”).
393. See FindLaw.com, “The McDonald’s Hot Coffee Case,” https://injury.findlaw.co
m/product-liability/the-mcdonald-s-coffee-cup-case-separating-mcfacts-from-mcfiction.html
(accessed Jan. 10, 2019).
394. Prison Litigation Reform Act of 1995: Hearing on S.1279, 152 Cong. Rec.
S14413 (daily ed. Sep. 27, 1995) (statement of Sen. Bob Dole, Senate Majority Leader).
395. Jon O. Newman, Not All Prisoner Lawsuits Are Frivolous, PRISON LEGAL NEWS,
v.7, n.4 Apr. 1996, at 6.
396. Id.

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correctional administrators’ hostility toward grievances. Accordingly, the
best way to ensure an effective and innovative ADR mechanism for prison
retail transactions is to remove it from the correctional system entirely. To
accomplish this, legislatures should consider creative ways of requiring
prison retailers to utilize outside ADR mechanisms. The details of such
systems will vary, but should be commensurate with the needs of any given
prison-retail operation and should leave litigation as an option. The most
critical component is an independent evaluator such as an ombudsperson
who works outside of the correctional agency,397 or a contractor who is
tasked with adjudicating disputes. A new ADR system could utilize
technology to obtain necessary information from the consumer, analyze
vendor data to identify problematic products or practices, and provide
performance data to the correctional agency for use when deciding whether
to renew a contract. Such novel solutions will likely require legislative
action, because they will be effective only to the extent the ADR neutral has
access to transactional details and vendor records—something to which that
vendors will not likely acquiesce unless required by law.
Federal
CFPB Regulation of Correctional Banking
Under title X of the Dodd-Frank Act,398 the CFPB is authorized to
prohibit unfair, deceptive, and abusive practices (“UDAAP”). The CFPB
should use these powers to comprehensively regulate the entire field of
correctional banking. Title X grants the CFPB the authority to prohibit
UDAAP by “covered persons,” which are defined as persons or entities
“engage[d] in offering or providing a consumer financial product or
service.”399 Correctional banking vendors transmit funds, provide payment
services, accept deposits for the purpose of facilitating transfers, and act as
custodians of stored value, all of which are statutorily defined as consumer
financial products or services for purposes of title X.400
The UDAAP provision in § 1031 of the Dodd-Frank Act includes
statutory definitions of the terms “unfair” and “abusive.” Unfair practices
are defined using the same definition as the FTC Act, requiring a likelihood
of substantial injury, unavoidable by the consumer, which is not
outweighed by countervailing benefits.401 Trust fund transfers, prepayment
397. Arthur L. Alarcón, A Prescription for California’s Ailing Inmate Treatment
System: An Independent Corrections Ombudsman, 58 HASTINGS L.J. 591 (2006).
398. Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111203, 124 Stat. 1376 (2010).
399. 12 U.S.C. § 5481(6)(A)(2012).
400. Id. §§ 5481(5), (8)(C), and (15)(A)(iv), (v) & (vii)(2012).
401. Id. § 5531(c)(1)(2012) (defining unfairness as an act or practice that is “likely to

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products, and release cards routinely injure consumers by imposing supracompetitive fees and unfair terms and conditions. The customers in these
transactions receive no corresponding benefit as a result of these practices,
nor do consumers have access to a competitive market.
Section 1031 contains several definitions of abusive practices, one of
which is an act or practice that “takes unreasonable advantage of . . . the
inability of the consumer to protect the interests of the consumer in
selecting or using a consumer financial product or service.”402 Again,
correctional banking products easily fit this definition because of the
complete lack of consumer choice and the exploitative fees that are levied
on vulnerable consumers.
Using its § 1031 powers, the CFPB should conduct an open-ended
rulemaking to address common practices in the correctional banking
industry. Such a rulemaking should include fee regulation and extension of
Regulation E’s compulsory-use prohibition to release cards. The Bureau
should also directly regulate correctional banking fees. While this level of
intervention would be somewhat unusual, even those who lean toward
market-oriented methods of fee regulation acknowledge that context
matters.403 In the case of correctional banking, the facility is the party that
evaluates bids and awards exclusive contracts. Transaction costs should
therefore be internalized and borne by the facility, which is in the best
position to minimize such costs.
Congressional Action
The most important step that Congress can take is to clarify FCC
jurisdiction over emerging technology. This issue is already on the
legislative radar screen. In 2017, Senator Tammy Duckworth introduced
legislation to clarify the FCC’s jurisdiction over ICS telephone service and
video visitation, regardless of whether such communications are inter- or
intrastate.404 The bill was assigned to committee and languished without
any further action. Due to technological changes in telecommunications,

cause substantial injury to consumers which is not reasonably avoidable by consumers,” and
such injury is not “outweighed by countervailing benefits to consumers or to competition”).
402. Id. § 5531(d)(2)(B)(2012); see also Adam Levitin, “CFPB ‘Abusive’
Rulemaking?” Credit Slips Blog (Oct. 17, 2018), https://www.creditslips.org/creditslips/
2018/10/cfpb-abusive-rulemaking.html (arguing that the abusive prong under the CFPB’s
enabling statute is basically duplicative of unfairness and deception).
403. Liran Haim & Ronald Mann, Putting Stored-Value Cards in Their Place, 18
LEWIS & CLARK L. REV. 989, 1016 (2014) (“In our view, the question of fee regulation [for
prepaid cards] should be largely contextual.”).
404. Video Visitation and Inmate Calling in Prisons Act of 2017, S. 1614, 115th Cong.
(2017).

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the traditional dichotomy between intra- and interstate communications
makes little sense.The Duckworth bill should be reintroduced in the current
congress and advocacy organizations should make passage a priority.
Wright Petition, Post-Remand
After the FCC took up the matter of ICS rate regulation, the
Commissioners fractured on the appropriate regulatory fix. But even
Chairman Pai, who led the dissent, admitted that government intervention
in the ICS market is appropriate given the documented market failure.405
Now that the D.C. Circuit has vacated portions of the FCC’s 2015 rule, the
ball is once again in the FCC’s court. Recall, however, that title II’s
requirement of just and reasonable rates can be enforced via private
litigation. The matter ended up before the FCC because courts were
receptive to ICS carriers’ citation to the primary jurisdiction doctrine. That
rule is a prudential doctrine, which some courts have declined to apply in
situations where “the agency is aware of but has expressed no interest in the
subject matter of the litigation.”406 If the FCC does not promptly take up
the Wright rulemaking now that it has been remanded, then courts should
interpret this as a lack of agency interest, and decline to invoke the primary
jurisdiction doctrine in future cases.
As for the substance of the rulemaking, the FCC should promulgate
new price caps for interstate ICS rates using a methodology that will satisfy
judicial review. The Commission should also reissue the same restrictions
on ancillary fees that were contained in the 2015 rules, but this time
specifically invoke § 152(b)’s “impossibility exception” as grounds to apply
the rules to intrastate calling.407
The Commission must also address ICS carriers that invoke their use of
VoIP technology to evade state regulation. When vacating the FCC’s caps
on intrastate rates, the D.C. Circuit relied on § 152 of the Communications
Act, which creates a presumption that states will regulate intrastate
communications.408 The purpose of § 152 is to respect the dual sovereignty
of federal and state regulators. To the extent that the industry is successful

405. See generally, In the Matter of Rates, supra note 243.
406. Astiana v. Hain Celestial Group, 783 F.3d 753, 761 (9th Cir. 2015).
407. See, e.g., Minn Pub. Utils Comm’n v. Fed. Comm’cns Comm’n, 483 F.3d 570, 577
(8th Cir. 2007) (impossibility exception “allows the FCC to preempt state regulation of a
service which would otherwise be subject to dual federal and state regulation where it is
impossible or impractical to separate the service’s intrastate and interstate components”); see
also supra note 224 (describing impossibility of segregating ancillary fees by call type).
408. Global Tel*Link v. Fed. Commc’ns Comm’n, 866 F.3d 397, 409 (D.C. Cir. 2017)
(“§ 152(b) of the 1934 Act erects a presumption against the Commission’s assertion of
regulatory authority over intrastate communications.”).

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in evading state regulation, then § 152 is no longer in play.
The Commission should also regulate emerging technologies such as
video visitation and electronic messaging. This may seem infeasible given
the current political makeup of the FCC, but it should not be. The
Commission can maintain a general agenda of deregulation and still
recognize the sui generis market failure that has occurred in prison
telecommunications. The novelty of the products should not obscure the
fact that customers are purchasing “mere transmission” of text, voice, or
video messages, the hallmark of communications services subject to
regulation under title II.409 Those services suffer from the same market
failures that the FCC identified in connection with telephone service in
correctional facilities, and basic rate caps and restrictions on abusive fees
would benefit consumers.
Conclusion
Prison retailing is a predictable result of an age of runaway carceral
growth coupled with legislative demands for fiscal austerity. While
common business practices in the industry regularly run afoul of existing
laws, substantial roadblocks make it difficult for injured customers to
exercise what rights they may have.
Meanwhile, correctional
administrators, who are in the best position to guard against industry
abuses, have largely indicated a lack of interest in consumer protection.
As discussed in the previous section, legislative and administrative
bodies have numerous tools at their disposal to address the problems of
prison retailing. A world without the parasitic companies that dominate the
industry is achievable, but given the profitability of current business
practices, pushback will be intense as companies defend their ability to
extract profits from captive customers. Accomplishing meaningful change
will thus require concerted effort by advocates and a willingness on the part
of policymakers to see incarcerated people and their families as consumers
entitled to the same protections that are enjoyed by most people every day.

409. See Restoring Internet Freedom, supra note 240, at ¶ 6 and 33 FCC Rcd. at 313
(describing information services as those that “offer more than mere transmission”).