National Consumer Law Center, Applying Consumer Laws to Commercial Bail, Prison Retail and Private Debt Collection, 2020

• Locations: United States of America • Topics: Bail/Pretrial Release

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COMMERCIALIZED
(IN)JUSTICE
LITIGATION GUIDE:
APPLYING CONSUMER LAWS
TO COMMERCIAL BAIL, PRISON
RETAIL, AND PRIVATE DEBT
COLLECTION
By Ariel Nelson, Brian Highsmith, Alex
Kornya, and Stephen Raher
National Consumer Law Center®

June 2020

ABOUT THE AUTHORS

ABOUT THE NATIONAL
CONSUMER LAW CENTER
Since 1969, the nonprofit
National Consumer Law Center®
(NCLC®) has used its expertise
in consumer law and energy
policy to work for consumer
justice and economic security
for low-income and other
disadvantaged people, in the
United States. NCLC‘s expertise
includes policy analysis and
advocacy; consumer law and
energy publications; litigation;
expert witness services;
and training and advice for
advocates. NCLC works with
nonprofit and legal services
organizations, private attorneys,
policymakers, and federal
and state governments and
courts across the nation to
stop exploitive practices, help
financially stressed families build
and retain wealth, and advance
economic fairness.

NCLC.ORG

Ariel Nelson is a staff attorney at the National Consumer
Law Center (NCLC) focusing on criminal justice debt and
credit and background reporting issues. She is a
contributing author to NCLC‘s Fair Credit
Reporting and Collection Actions. Previously, she litigated
administrative and environmental law cases as a staff
attorney/clinical teaching fellow at Georgetown University
Law Center. She also served as a law clerk to the
Honorable Judge David O. Carter of the U.S. District Court
for the Central District of California and to the Honorable
Judge Dorothy W. Nelson of the U.S. Court of Appeals for
the Ninth Circuit. She holds a B.A. from the University of
California, Berkeley and a J.D. from Harvard Law School.
She is admitted to practice law in Massachusetts,
California, and the District of Columbia.
Brian Highsmith is a Senior Researcher in Residence at
Yale Law School‘s Arthur Liman Center for Public Interest
Law. Previously, he was a Skadden Fellow at NCLC,
working on criminal justice debt and the criminalization of
poverty in various consumer law contexts. Before joining
NCLC, he worked on domestic economic policy with a
focus on income support programs and fiscal policy—
including as an advisor at President Obama‘s National
Economic Council, the Center on Budget and Policy
Priorities, and the office of Senator Cory Booker. He is a
graduate of Yale Law School and Furman University. He is
admitted to the Maryland bar.
Alex Kornya is the litigation director and general counsel
at Iowa Legal Aid. In his career at Iowa Legal Aid, he has
advocated for economic justice primarily in the areas of
consumer protection, tax, and housing. Since 2009, he has
advocated for the rights of low-income people facing the
burden of criminal justice debt, developing and raising
various constitutional and consumer protection theories and
achieving systemic change.
Stephen Raher is a lawyer in Portland, Oregon. He has
worked as a bankruptcy and commercial litigation attorney
in private practice and is a regular volunteer counsel with
the Prison Policy Initiative, a national criminal-justice
research and advocacy organization. He helped found the
Colorado Criminal Justice Reform Coalition, where he
worked as a policy analyst, and has published works on a
wide variety of topics including insolvency law, correctional
privatization, and consumer law in the criminal justice
system. He holds a master of public administration from the
University of Colorado, a J.D. from Lewis & Clark Law
School, and is admitted to practice law in Oregon
and Washington.

ACKNOWLEDGEMENTS
The authors wish to thank National Consumer Law Center
(NCLC) attorneys Abby Shafroth, Charles Delbaum, John
Rao, and Olivia Wein and NCLC Deputy Director Carolyn
Carter for their invaluable advice, feedback, and edits;
NCLC Communications Director Jan Kruse for editorial
review; Research Assistant Anna Kowanko for conducting
research; and NCLC Digital Content and Operations
Assistant Moussou N‘Diaye for layout assistance. The
authors would like to acknowledge the other public
interest lawyers on whose foundational work we attempt
to build, including—among many others—Danica
Rodarmel, Ivy Wang, Ted Mermin, Mel Gonzalez, Veryl
Pow, and Andrea Woods. They are also endlessly
grateful to the organizers, advocates, and directly
impacted people who have long fought the injustices
discussed here and directly paved the way for the legal
strategies we now contemplate. NCLC thanks Arnold
Ventures, whose support of our work made this litigation
guide possible. The views expressed in this litigation
guide are the authors‘ and do not necessarily represent
the views of the funder.

TABLE OF CONTENTS
I.

II.

INTRODUCTION

A. The Problem of Consumer Abuses by Companies Profiting off the Criminal Legal System

B. Bringing a Consumer Protection Lens to Litigation and Regulation of Companies Profiting
off the Criminal Legal System

C. Overview of This Litigation Guide

COMMERCIAL BAIL

A. Overview: The Cost of Commercial Bail for Low-Income Families

B. The Structure and Regulation of Commercial Bail Bonds

C. Problematic Practices That May Give Rise to Consumer Protection Solutions

1. Conduct during Collection

2. Financing and Collection of Premiums

3. Abusive Contract Provisions

D. Application of Consumer Law to Commercial Bail Bond Transactions
1. Fair Debt Collection Practices Act and State Analogs: Protection against Unfair
Debt Collection Practices
i.

Fair Debt Collection Practices Act

ii. State Analogs to the Fair Debt Collection Practices Act
2. State Unfair and Deceptive Acts and Practices Laws and Related State-Based
Consumer Protections: General Protections against Unfair, Deceptive, and Abusive
Practices
i.

Unfair and Deceptive Acts and Practices Laws

15
15
16
18
18

ii. Other State Consumer Protection Laws Applicable to Bail Bond Agreement Terms 21
3. Truth in Lending Act: Disclosure Requirements

4. Article 9 of the Uniform Commercial Code and Other State Laws: Regulating the
Receipt and Repossession of Collateral

5. Antitrust Law: Protection against Anticompetitive and Collusive Behavior

E. Theories of Liability for Reaching the Surety

1. Tort Liability through Agency Principles

2. Breach of Contract Liability through Agency Principles

3. Liability through RICO and Other Theories of Secondary Liability

III. PRISON RETAIL
A. Parties Involved in Prison Retail Transactions

32
33

1. End Users

2. Payors

3. Facilities

4. Vendors

B. Prison Communications: Overview and Regulation

1. Overview of Prison Communications and the Inmate Calling Services Industry

2. Brief History of Prison Communications Regulation

TABLE OF CONTENTS (cont.)
C. Financial Transactions: Overview
1. Overview of Correctional Banking

2. Overview of Types of Money Transfers

Inmate Trust Accounts

ii. Direct Payments to Vendors

iii. Release Cards

D. Consumer Litigation Regarding Prison Retail Transactions

1. Litigation Concerning Communications

2. Litigation Concerning Contemporaneous Payments and Money Transfers

3. Litigation Concerning Release Cards

4. Potential Claims across Prison Retail Transactions

Challenging Prison Retail Prices and Practices Using State Unfair and Deceptive
Acts and Practices Laws

ii. Prices

iii. Terms and Conditions

iv. Sales of Goods

v. Challenging Site Commissions Using State Limitations on Local Governments‟
Revenue Authority

IV. DEBT COLLECTION BY PRIVATE CONTRACTORS

A. Applying the Fair Debt Collection Practices Act to Private Debt Collection Companies

B. Unfair and Abusive Practices Prohibited by the Fair Debt Collection Practices Act

POTENTIAL OBSTACLES TO LITIGATION

A. Arbitration

B. Filed-Rate Doctrine

VI. CONCLUSION

I. INTRODUCTION
A. The Problem of Consumer Abuses by Companies Profiting off
the Criminal Legal System
Increasingly, Americans who have contact with the criminal legal system find themselves
deprived not only of their liberty but also of their property, as the system imposes onerous fines
and fees on criminal defendants and their loved ones. Today, the resulting criminal justice debts
often are owed not only to the state, but also to a vast network of private companies profiteering
from the criminalization of poverty and communities of color.
This newer form of criminal justice debt stems from financial charges levied throughout a
person‘s contact with the criminal legal system. From commercial bail agents to prison retailers
(the private companies—including telecommunications providers, technology companies,
commissary operators, and money transmitters—that charge incarcerated people and their
families for basic or essential goods and services), the American corrections industry imposes a
range of high-cost services on low-income consumers facing extreme pressures and limited or
no choices. Individuals forced to choose between high-cost bail bonds or time in jail, between
using the exorbitantly high-cost phone calling company to which the county has granted a
prison monopoly or not talking to a child, or between getting their money upon release on a
specific debit card or not at all often are involuntary or painfully exploited consumers.
How did we get here? States and local governments have increasingly offloaded core functions
of their criminal legal systems—traditionally public services—onto private corporations
operating to maximize profit for their owners and shareholders. The companies offering these
―
services‖ have worked with state and local governments to commercialize nearly every
segment of our modern punishment continuum.
The burden of paying the inflated costs resulting from exploitative practices in the criminal legal
system is concentrated on a much smaller group (those who have contact with the criminal
legal system), compared to the broad group of taxpayers who pay for government operations
under public financing models. And people in this smaller group are far more likely to be (1)
people of color, due to discriminatory policing and sentencing practices, as well as racial wealth
disparities that leave people of color with fewer options to avoid financial exploitation, and (2)
poor, in part because economically depressed communities are frequently targeted by law
enforcement and tend to have limited options to avoid predatory services.

B. Bringing a Consumer Protection Lens to Litigation and
Regulation of Companies Profiting off the Criminal
Legal System
This litigation guide builds on the exploration of these problems in the National Consumer Law
Center‘s 2019 report, Commercialized (In)Justice: Consumer Abuses in the Bail and
Corrections Industry, by deepening the analysis of industry misconduct and illuminating

Commercialized (In)Justice
Litigation Guide

potential litigation and regulatory enforcement approaches to address some of the commercial
abuses occurring in the shadows of the criminal legal system.1 It focuses in particular on the
application of consumer protection statutes to the bail bond industry, the prison retail industry,
and the private debt collection industry. Advocates are just beginning to challenge aspects of
the criminal legal system through consumer laws. As a result, this area of law is in its nascent
stages and this guide does not always point to concrete examples of how certain theories have
been successfully deployed. Instead, it highlights potential claims for advocates and regulators
to consider and flags issues for additional research.
Many advocates, quite reasonably, approach problems involving companies involved in the
criminal legal system through a criminal justice and civil rights lens. This can and should
continue. But thinking about these companies‘ practices through a consumer protection lens
opens a new and complementary set of possibilities for litigants. For example, if bail bond
companies, prison retail companies, and private debt collectors are routinely engaged in
abusive, predatory behavior with respect to individuals who have contact with the criminal legal
system, then those businesses should be held accountable through the same laws that would
apply were they operating in any other corner of the marketplace. Otherwise, the legal system
permits, and may even encourage, these abuses. Holding bail bond agents, prison retailers,
and debt collectors to account through consumer laws such as the Truth in Lending Act, the
Fair Debt Collection Practices Act, or state Unfair and Deceptive Acts and Practices laws
means that some of the most vulnerable consumers in our society will have access to these
basic protections against abusive and exploitative practices, while advocates simultaneously
work to end mass incarceration and criminalization in the United States through other avenues.

C. Overview of This Litigation Guide
This litigation guide focuses on the application of consumer laws to three industries in particular:
the bail bond industry, the prison retail industry, and the private debt collection industry.
This guide begins with the commercial bail industry. This section:
 Provides an overview of the commercial bail system and how commercial bail bonds are

structured and regulated;

 Examines problematic practices in the bail bond industry that may warrant consumer

protection responses;

 Discusses how specific consumer protection laws may apply to commercial bail bond

transactions; and

 Explores theories of liability for how to reach the companies (known as ―
sureties‖) that

typically underwrite the bonds sold by bail bond agents.

This guide relies and builds on the following sources by the authors and their colleagues: BRIAN HIGHSMITH, NATIONAL
CONSUMER LAW CENTER, COMMERCIALIZED (IN)JUSTICE: CONSUMER ABUSES IN THE BAIL AND CORRECTIONS INDUSTRY (2019),
Stephen Raher, The Company Store and the Literally Captive Market: Consumer Law in Prisons and Jails, 17 HASTINGS
RACE & POVERTY L.J. 3 (2020); Alex Kornya, Danica Rodarmel, Brian Highsmith, Mel Gonzalez, & Ted Mermin,
Crimsumerism: Combating Consumer Abuses in the Criminal Legal System, 54 HARV. C.R.-C.L.L. REV. 107 (2019);
Abby Shafroth, David Seligman, Alex Kornya, Rhona Taylor, & Nick Allen, NATIONAL CONSUMER LAW CENTER,
CONFRONTING CRIMINAL JUSTICE DEBT: A GUIDE FOR LITIGATION (2016).
Commercialized (In)Justice
Litigation Guide

Next, the guide turns to the prison retail industry. This section:
 Describes the parties typically involved in prison retail transactions;
 Provides an overview of prison communications and a brief history of prison

communications regulation;

 Provides an overview of correctional banking and the types of money transfers and payment

services that incarcerated people and their families must use;

 Discusses examples of and unique considerations for litigation concerning specific prison

retail areas; and

 Explores the potential use of state Unfair and Deceptive Acts and Practices laws, state laws

relevant to site commissions, and antitrust laws to challenge exploitative practices across the
prison retail industry.

The guide then examines the private debt collection industry. This section:
 Discusses the outsourcing of the collection of criminal justice debts to private contracts;
 Describes how the Fair Debt Collection Practices Act may apply to private debt collection

companies, and potential limitations; and

 Provides an overview of the range of deceptive, abusive, and unfair practices that the Fair

Debt Collection Practices Act may protect against in the criminal justice debt context.

The final section of the guide highlights two obstacles that may arise when litigating claims
against private companies involved in the criminal legal system: arbitration clauses and the
filed-rate doctrine.

II. COMMERCIAL BAIL
The commercial bail industry operates as part of the pretrial process—the period between
arrest and the resolution of the criminal case.2 As described below, individuals who cannot
afford bail typically must turn to the commercial bail market. Commercial bail bonds are, at their
core, a specialized form of insurance, replacing cash bail paid directly to the court with a
promise to appear backed by a third-party surety. The commercial bail industry profits from
taking advantage of people at their most vulnerable: when they—or their loved ones—face a
choice between paying a bail agent under the offered terms or staying in jail.
This section explores various ways to hold players in the commercial bail industry liable through
consumer laws.3 It provides an overview of the commercial bail system, discusses problematic
practices that may give rise to consumer protection responses, and explores how specific
consumer laws may apply to commercial bail bond transactions. It also delves into theories of
liability for how to reach the large insurance corporations (known as ―
sureties‖) that typically
underwrite the bonds sold by smaller bail bond businesses. Although this area of law is still very
2

See generally Criminal Justice Policy Program, Moving Beyond Money: A Primer on Bail Reform, Harvard Law
School (Oct. 2016).
3
Portions of this section were originally published as Kornya, et al., Crimsumerism, supra note 1.

Commercialized (In)Justice
Litigation Guide

much in development, a significant amount of successful litigation already has occurred, and
this section highlights successful cases to illustrate how advocates may bring certain consumer
law claims in the bail context. Because substantial uncharted territory still exists in applying
consumer law to the commercial bail system, this section also goes beyond existing case law to
consider other potentially viable consumer claims and theories of liability.

A. Overview: The Cost of Commercial Bail for Low-Income Families
Most jurisdictions allow commercial bail. In these jurisdictions, accused persons generally have
two options for posting bail. First, they can post the entire bail amount themselves with the
court, in which case the court generally will return their money if they attend their required court
appearances and meet any other bail conditions, which may include periodic check-ins or not
being charged with additional crimes.4 Second, accused persons can pay a private bail bond
agent a non-refundable premium, typically in the range of 10% of the bail amount. In exchange,
the bail agent posts a bond with the court and promises to pay the full bail amount if the bond is
forfeited. The accused person‘s failure to appear or meet other bail conditions generally triggers
the forfeiture of the bond. These commercial bail bonds are, in essence, a specialized form
of insurance.
This basic structure of commercial bail ensures that people who do not have access to enough
money to post bail will have to pay non-refundable fees to a bail bond agent to avoid jail.
Although people who can afford to post the bail themselves typically can expect to receive the
full amount back when their case concludes,5 people who cannot afford to pay and thus turn to
the commercial bail market never get back the substantial amount of money paid to bail bond
agents and their corporate partners that underwrite the bonds. That is true even in cases of
false arrest, where the charges are dropped, or where the individual facing charges is found not
guilty. And when consumers of commercial bail bonds—low-income accused persons and often
their family members and friends6—cannot afford to pay the full amount of the bond up front,
they enter financing agreements and are frequently left with persistent, lingering debts. Further,
bail contracts often require the signature of an indemnitor—typically a family member or close
friend—who can be held financially liable. The requirement to pay the bond also may
4

Advocates should note that in some jurisdictions, accused persons may not get all of their bail money back. Some
jurisdictions practice ―b
ail offset,‖ which typically allows the posted bail money to be taken to pay off criminal justice debts.
See, e.g., FLA. STAT. § 903.286 (―T
he clerk of the court shall withhold from the return of a cash bond posted on behalf of a
criminal defendant by a person other than a bail bond agent . . . sufficient funds to pay any unpaid costs of prosecution,
costs of representation . . . , court fees, court costs, and criminal penalties.‖); IND. CODE § 35–33–8–3.2(a)(2) (―
If the court
requires the defendant to deposit cash or cash and another form of security as bail, the court may . . . [r]equire the
defendant to execute[] an agreement that allows the court to retain all or a part of the cash or securities to pay fines, costs,
fees, and restitution that the court may order the defendant to pay if the defendant is convicted.‖); IOWA CODE § 602.8103(6)
(―T
he clerk may . . . [e]stablish and maintain a procedure to set off against amounts held by the clerk of the district court and
payable to the person any debt which is in the form of a liquidated sum due, owing and payable to the clerk.‖)
5
But see supra note 4.
6
Research indicates that bail bond deposits are disproportionately paid by women of color. See ISAAC BRYAN, ET AL., THE
PRICE FOR FREEDOM: BAIL IN THE CITY OF L.A. (2017); Joshua Page, et al., A Debt of Care: Commercial Bail and the Gendered
Logic of Criminal Justice Predation, 5 Russell Sage Foundation Journal of the Social Sciences 150, 165 (2019); see also
SANETA DEVUONO-POWELL, ET AL., ELLA BAKER CENTER, FORWARD TOGETHER, RESEARCH ACTION DESIGN, W HO PAYS? THE TRUE
COST OF INCARCERATION ON FAMILIES, ELLA BAKER CENTER FOR HUMAN RIGHTS (2015), (describing the impact of collateral
consequences of incarceration on family members of incarcerated people; stating that of the family members primarily
responsible for court-related costs associated with conviction, 83% were women).

Commercialized (In)Justice
Litigation Guide

necessitate other forms of borrowing within the accused person‘s social circle, thus extending
the economic costs across communities.7
Numerous studies and investigative reporting confirm that
the American bail industry is rife with illegal practices that
The American bail
harm low-income consumers and undermine the goals of
industry is rife with illegal
the criminal legal system.8 These abusive practices
practices that harm lowinclude charging undisclosed or illegal fees or excessive
income consumers and
rates of interest; misleading consumers about the terms of
undermine the goals of
their bail agreements or about their legal options;
the criminal legal system.
engaging in harassing and abusive collection practices,
including threats to send accused persons back to jail
without a legal basis to do so; forcing bail bond cosigners to turn over property that was used as
collateral in cases where the accused person complied with the terms of bail; operating without
state-required licenses; and failing to comply with reporting obligations.9

B. The Structure and Regulation of Commercial Bail Bonds

Credit: Color of Change and the American Civil Liberties Union, $elling Off Our Freedom: How Insurance
Corporations Have Taken Over Our Bail System (2017) (graphic edited).
7

DEVUONO-POWELL, ET AL., supra note 6, at 7–9, 12; see also COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, SELLING OFF
OUR FREEDOM: HOW INSURANCE CORPORATIONS HAVE TAKEN OVER OUR BAIL SYSTEM 31–32 (2017).
8
See, e.g., Jessica Silver-Greenberg & Shaila Dewan, When Bail Feels Less Like Freedom, More Like Extortion, N.Y. TIMES
(March 31, 2018); Shane Bauer, Inside the Wild, Shadowy, and Highly Lucrative Bail Industry, MOTHER JONES (May/June
2014).
9
See generally Mel Gonzalez, Consumer Protection for Criminal Defendants: Regulating Commercial Bail in California, 106
CALIF. L. REV. 1379, 1397–99 (2018).

Commercialized (In)Justice
Litigation Guide

Understanding the application of consumer laws to commercial bail bonds requires some
familiarity with how the system works. As noted above, an accused person who cannot afford to
post the full amount of the bail set by the court often turns to a commercial bail bond agent. The
bail bond agent writes the bond contract and collects a non-refundable bond premium from the
accused person or any loved one who cosigns as an indemnitor (the person obligated to pay
when the accused person seeking the bond does not or cannot). After receiving payment, the
bail agent files a bond with the court to obtain the accused person‘s release and guarantee their
appearance in court or the payment of the bond in full. Although these bail bond agents and
their storefronts—which are often lined up near courthouses—are the public face of the
industry, they are only the front end of a larger network of actors.
Most bail bond agents are backed by a large insurance
company, known as a ―
surety.‖10 Bail agents pay a percentage,
typically around 10% of the premium they charge the person
seeking the bond, to an insurance company for underwriting.11
Although the bail agents guarantee to their surety company that
they will be responsible for any forfeiture of the bond, they also
usually pay an additional 10% into a ―
build-up fund‖ held by the
surety company to ensure that funds will be available.12 While
about 25,000 bail bond businesses exist across the country, just
a few insurance companies—which are increasingly part of
major global finance companies—back the majority of bail
bonds.13 Even though the insurance companies‘ risk in the
transactions is limited and their role is largely hidden from public
view, these companies play a crucial role in the commercial
bail system.14

While about 25,000
bail bond businesses
exist across the
country, just a few
insurance
companies—which
are increasingly part
of major global
finance companies—
back the majority of
bail bonds.

The commercial bail industry is regulated primarily at the state level.15 One of the key ways that
states regulate the industry is by establishing the rates that bail bond agents may charge
consumers. All states that allow commercial bail bond agents regulate the maximum and
minimum premium amounts—typically expressed as a percentage of the amount of the bond
and referred to as a ―
rate‖—bail agents are allowed to charge.16 However, states take different
COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 11 (―
With surety bonds, the insurance company
guarantees to a third party that the person or entity seeking the bond can fulfill their obligations. They require the person
seeking the bond to indemnify the insurer, guaranteeing payments and costs, and leaving the insurer on the hook only as a
last resort.‖); see also id. at 14, 22–25.
11
Id. at 14.
12
Id. at 14, 24.
13
Id. at 6–7. The Color of Change and the ACLU have calculated that ―j
ust nine insurance companies back a significant
majority of the $14 billion in bail bonds issued each year.‖ Id. at 7.
14
Note that bail insurers have actively promoted legislation requiring bail bond agents to have insurer backing. See, e.g.,
CAL. INS. CODE § 1802.1 (requiring bail agent applicants to file with the state a notice of appointment, executed by a surety
insurer, ―a
uthorizing that applicant to execute undertakings of bail and to solicit and negotiate those undertakings‖ on behalf
of the surety insurer).
15
As sureties, commercial bail bond producers and underwriters generally are regulated by state insurance commissions
along with most other forms of insurance. Citing this form of existing regulation, the commercial bail industry sometimes
argues that laws protecting consumers should not apply to their line of work.
16
Some state laws also address fees and surcharges. See, e.g., COLO. REV. STAT. § 10-23-109 (2012) (―
A professional
cash-bail agent . . . shall not assess fees for any bail bond posted by the agent with the court unless the fee is for payment
of a bail bond filing charged by a court or law enforcement agency, the fee is for the actual cost of storing collateral in a
10

Commercialized (In)Justice
Litigation Guide

approaches to rate regulation: the states are roughly equally split between those that set
maximum premium rates by statute17 and those that operate on the ―
filed-rate doctrine.‖18 Filedrate states require surety companies to submit a proposed maximum rate. Subject to the
approval of the insurance commissioner, those proposed rates are adopted on a company-bycompany basis as binding on the surety.
The documents setting out the approved rates are generally available from state insurance
commissions, the majority of which use a public records system called the System for Electronic
Rates and Form Filing (―
SERFF‖). These databases can be a treasure trove of information for
exploring the business practices of bail bond producers and surety companies. However,
documentation may be limited because some states do not require filings predating the advent
of SERFF in that jurisdiction to be re-filed in the electronic database.19
Although rate regulation is the primary way that states have acted to protect consumers from
exploitation by the commercial bail industry, states have the authority to do much more. States
generally are permitted and expected to regulate businesses to protect consumers, and the
McCarran-Ferguson Act, which was intended to preserve states‘ regulatory domain over
insurance matters,20 reflects that states have significant authority to regulate insurance matters,
including those involved in commercial bail.
In addition to critical state law regulations and consumer protections that may apply to the
commercial bail industry, federal consumer protection law can provide targeted sources of
protection. This guide explores potential application of some of these federal consumer
protection laws, including the Fair Debt Collection Practices Act, Truth in Lending Act, the
Communications Act of 1934 (as amended by Telecommunications Act of 1996), the Electronic
Fund Transfer Act, and the Gramm-Leach-Bliley Act.21
However, advocates should be aware from the outset that the McCarran-Ferguson Act can
complicate the applicability of federal statutory claims to bail bond transactions. The Act
invalidates the application of federal law to the insurance industry when the federal law conflicts
with state regulation of the business of insurance, unless the federal law specifically relates to

secure, self-service public storage facility, or the fee is for premium financing.‖); GA. CODE ANN. § 17-6-30 (2010) (―Su
reties
on criminal bonds in any court shall not charge or receive more than 12 percent of the face amount of the bond set in the
amount of $10,000 or less, which includes the principal and all applicable surcharges . . . .‖).
17
See e.g., ARK. CODE § 17-19-301 (2014); COLO. REV. STAT. § 10-23-109 (2012), GA. CODE ANN. § 17-6-30 (2010); LA.
STAT. ANN. § 22:1443 (2011); MICH. COMP. LAWS § 750.167b(3) (2006); MISS. CODE § 83-39-25 (2013); NEV. REV. STAT.
§ 697.300 (2013); N.Y. INS. LAW § 6804 (McKinney 1997); N.C. GEN. STAT. § 58-71-95 (2015); N.D. CENT. CODE § 26.1-26.608 (2015); S.C. CODE § 38-53-170 (2012); TENN. CODE. ANN. § 40-11-316 (2010).
18
In states with a commercial bond industry, the standard rate is generally 10% of the amount of the bond. This is true
across states that set their maximum rates by statute and ―
filed rate‖ states. However, several states, including Colorado,
Georgia, Nevada, North Carolina, and South Carolina, set their maximum rates at 15%. See COLO. REV. STAT. § 10-23-109;
GA. CODE § 17-6-30; NEV. REV. STAT. § 697.300; N.C. GEN. STAT. § 58-71-95; S.C. CODE § 38-53-170. North Dakota allows
as much as 20%. See N.D. CENT. CODE § 26.1-26.6-08.
19
In Iowa, for example, any rate documents that were filed before 2010 are not included in the SERFF database.
Unfortunately, the Insurance Division also destroyed paper filings after the transition to SERFF, which means that in that
state the only source of approved rate information for pre-SERFF rate documents often is the surety company itself.
20
15 U.S.C. § 1011.
21
Other federal consumer protection laws not addressed in this guide also may apply to the commercial bail industry,
including the Equal Credit Opportunity Act, see Kornya, et al., Crimsumerism, supra note 1, at 144–47.

Commercialized (In)Justice
Litigation Guide

the business of insurance.22 In the context of consumer claims against bail bond companies, the
Act has three major ramifications. One is that state law claims may be more feasible in
situations where the conduct at issue clearly constitutes ―
the business of insurance‖ (see pages
23
17, 22). Another is that care must be taken to distinguish between matters pertaining to the
business of insurance and related but separate transactions—for example, the services of a
middleman, or the separate financing of a premium (see pages 14, 17, 22).24 Finally, the
McCarran-Ferguson Act can be used to argue that other consumer-unfriendly federal laws,
notably the Federal Arbitration Act, do not apply to certain disputes involving bail bonds.25

C. Problematic Practices That May Give Rise to Consumer
Protection Solutions
There are three typical scenarios in which commercial bail bonds create problems for
consumers that may give rise to consumer protection law claims. The first is the collection of
bonds that were forfeited due to an alleged violation of the bond agreement; for example, if the
accused does not appear for a required hearing.26 The second involves the financing and
collection of premiums. The third situation, often intertwined with one or both of the previous
two, involves abusive contract provisions. In these three contexts, the following broad
categories of problematic practices may arise that may violate consumer protection laws.

1. Conduct during Collection
Many bail bond agents act as private law enforcement agents. They thereby blur the line
between enforcement of the terms of the bond agreement, such as ensuring the accused
person‘s appearance for hearings, and mere debt collection. In particular, bail agents routinely
use tools not available in other debt collection contexts, including physical restraint,
orchestrated arrest, and intimidation, to encourage the payment of installments for financed
premiums.27 Bail agents also may engage in illegal and abusive practices in connection with the
repossession of collateral or may enter onto private property without clear authority to do so.28
Many bail bond contracts purport to give bail agents the right to contact third parties or to enter

15 U.S.C. § 1012.
Id. By negative inference, state laws are not be subject to the reverse preemption of the McCarran Ferguson Act. See
James O. Pearson, Jr., Annotation, Financing of Insurance Premiums as Constituting “Business of Insurance” Within § 2 of
McCarran-Ferguson Act (15 U.S.C.A. § 1012), Excluding Application of Truth in Lending Act (15 U.S.C.A. § 1601 et seq.) to
Such Financing, 51 A.L.R. FED. 743 (1981).
24
See James O. Pearson, Jr., Annotation, Financing of Insurance Premiums as Constituting “Business of Insurance” Within
§ 2 of McCarran-Ferguson Act (15 U.S.C.A. § 1012), Excluding Application of Truth in Lending Act (15 U.S.C.A. § 1601 et
seq.) to Such Financing, 51 A.L.R. FED. 743 (1981).
25
See McKnight v. Chicago Title Ins. Co., Inc., 358 F.3d 854, 856–59 (11th Cir. 2004); Standard Sec. Life Ins. Co. of New
York v. West, 267 F.3d 821, 823 (8th Cir. 2001); Mutual Reinsurance Bureau v. Great Plains Mut. Ins. Co., 969 F.2d 931,
933–35 (10th Cir. 1992).
26
Bail bonds are rarely declared forfeited; when they are, the bail agent retains the primary obligation for paying the
forfeiture. Even when this happens, sureties can typically collect from funds previously paid by the agents and held in
reserve. COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 14; see also Gonzalez, supra note 9, at 1422.
27
See Jessica Silver-Greenberg & Shaila Dewan, When Bail Feels Less Like Freedom, More Like Extortion, N.Y. TIMES
(March 31, 2018).
28
See, e.g., Complaint at 2, Cason v. 1 Bail Bonds, No. CVCV053198 (Iowa Dist. Ct. for Polk Cnty. Mar. 10, 2017).
23

Commercialized (In)Justice
Litigation Guide

into private homes without warning or permission, and these aggressive collection tactics
sometimes involve violence or weapons.29

2. Financing and Collection of Premiums
Financed bail bonds raise additional concerns and opportunities for abusive financing terms
and acts of collection.30 Also called ―
financed premiums‖ (or ―
credit bail,‖ or ―
credit bonding‖),
the financing of bail bonds refers to the practice of allowing the accused person or their
indemnitor (a person who guarantees to the bail agent that they will be responsible for paying
the entire bail amount if the accused person does not appear in court or otherwise violates the
terms of the contract) to pay the bond premium in installments, often in return for financing fees
and costs. For example, a person may be arrested and have bail set at $10,000. The accused
person seeks out a commercial bail bond agent, who charges the maximum premium amount
permitted in that state—say 10%, or $1,000. The accused person cannot afford to pay the bail
agent‘s $1,000 fee in its entirety upfront, so she puts down $500 and finances the remaining
$500 plus interest and fees to be paid to the bail agent in installments.
The availability of and restrictions on financed premiums vary across jurisdictions. Only a small
minority of states explicitly disallow financed premiums. For example, in Arkansas, the practice
was prohibited via judicial rulemaking, surviving a 42 U.S.C. § 1983 challenge by the bail bond
industry on immunity and abstention grounds.31 And Indiana law makes it a felony to fail to
collect the entire premium at the time the bond is executed.32 In contrast, some states, such as
Connecticut and Maryland, explicitly allow financed premiums, but regulate their terms.33 Other
states generally prohibit the collection of anything beyond the premium itself, or any sum
exceeding a maximum fee set by statute.34
Understanding the procurement of the bond as a transaction distinct from the financing of the
bond premium is critical for two reasons. First, the act of financing the premium may trigger
liability under a variety of consumer laws that regulate lending. Second, to the extent that issues
related to financing are distinguishable from issues involving the underlying insurance product,
29

See, e.g., MacKenzie Elmer, Throwing punches, waiving guns: tactics of Iowa bail bondsmen raise questions, DES
MOINES REGISTER (April 27, 2017); Mitchell v. First Call Bail & Sur., Inc., 412 F. Supp. 3d 1208, 1214–15 (D. Mont. 2019)
(owner of the bail bond agency hired a paramilitary group to arrest the accused person; paramilitary group members
engaged in violent tactics, including kicking down door of accused person‘s home and pointing guns at family).
30
The practice is controversial even within the industry. See From the OBA President‟s Desk, THE BONDSMAN (Okla.
Bondsman Ass‘n, Okla. City, Okla.), Oct. 2010, at 1. Within the industry, proponents of the practice discuss the difficulty of
competing in a market where others use financed premiums, complain of being unfairly singled out when compared to other
insurance products, and point out that many other bail bonds are being externally financed via credit cards. Opponents
generally focus on public safety concerns, including release of accused people without sufficient security; some more cleareyed bail agents point out the potential trouble involved with getting into the ―l
oan shark business.‖ Comments, Michael J.
Whitlock, No Payment Terms for Criminals Some Say, AMERICAN SURETY COMPANY BLOG (December 11, 2013, 12:00 AM),
archived.
31
See John Chism Bail Bonds Inc. v. Pennington, 656 F. Supp. 2d 929, 938–39 (E.D. Ark. 2009), aff‟d 411 Fed. Appx. 927
(8th Cir. 2011).
32
IND. CODE § 27-10-4-5 (2014); see also State v. Bigbee, 292 N.E.2d 609, 611 (Ind. 1973).
33
See CONN. GEN. STAT. § 38a-660c (2018) (mandating a minimum 35% down payment, a promissory note that requires all
payments to be made within 15 months, and a civil action if any payment remains outstanding for more than 60 days); MD.
CODE REGS. § 31.03.05.09 (requiring the financed premium to be evidenced by a state-generated form, and a good faith
effort by the bail agent to collect).
34
See Stillman v. Goldfarb, 431 N.W.2d 247, 252 (Mich. Ct. App. 1988).

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Litigation Guide

federal claims relating to financing the premium may be able to escape reverse preemption
under the McCarran-Ferguson Act.

3. Abusive Contract Provisions
Bail bond agent and surety contracts generally are available on almost any given state‘s SERFF
database. A review of these contracts reveals a wide array of provisions that may be
unenforceable or violate various consumer protection laws. These include preemptive waivers
of bankruptcy rights; failure to provide proper disclosures to cosigners; language purporting to
give security interests in property acquired in the future; waivers of rights to notice and
commercially reasonable sale in regard to repossessed collateral; consent to entry onto private
property of the accused and third parties and GPS tracking; illegal attorney‘s fees clauses; and
authorizations to obtain judgments by confession.35

D. Application of Consumer Law to Commercial Bail
Bond Transactions
This section explores how specific consumer protection laws may apply to commercial bail bond
transactions. First, this section discusses the Fair Debt Collection Practices Act (―
FDCPA‖),
concluding that although the FDCPA may have limited application to the commercial bail
context, state analogs may provide relief where the federal statute cannot. Second, it explores
how advocates can use state Unfair and Deceptive Acts and Practices Laws (―
UDAP‖) laws,
which provide a private cause of action for consumer fraud and other types of misconduct, to
address abusive practices by bail bond agents. It also notes that some states have specific
consumer laws that may protect consumers from unfair bail bond agreements. Third, this
section discusses the application of the Truth and Lending Act (―
TILA‖) to financed bail bond
premiums and also addresses the primary barriers to bringing TILA claims. Fourth, it explores
how the manner in which collateral (property that bail bond agents often require the accused
person or their loved ones to sign over to cover the full bail amount) is repossessed may give
rise to actions for damages under Article 9 of the Uniform Commercial Code (―
UCC‖). This
section also notes that a bail bond agent‘s receipt of collateral in connection with the bail
transaction may give rise to a fiduciary duty and create additional obligations to make
affirmative disclosures about material facts. Finally, it describes how antitrust laws may provide
a mechanism to protect consumers from unfair and abusive bail industry practices.

1. Fair Debt Collection Practices Act and State Analogs: Protection against Unfair
Debt Collection Practices
Bail agents are notorious for engaging in harassing and abusive practices to collect bail
premiums and other charges. These practices include placing intimidating phone calls36 and
making threats to send the accused person back to jail without legal basis to do so.37 They may
35

A comprehensive overview of such provisions in California-based contracts reveals similar patterns. See The Devil in the
Details: Bail Bond Contracts in California, UCLA SCHOOL OF LAW CRIMINAL JUSTICE REFORM CLINIC 1 (2017).
36
See, e.g., Monroe v. Frank, 936 S.W.2d 654, 657 (Tex. App. 1996).
37
See, e.g., Brian Highsmith, Testimony before New York State‘s Department of Financial Services, Division of Consumer
Protection and Division of Criminal Justice Services, Bail Bond Reform Listening Session (June 11, 2018).

Commercialized (In)Justice
Litigation Guide

try to coerce payment by contacting and even threatening the accused person‘s friends,
families, and employers.38 And they may attempt to detain their customers until someone pays,
conduct that may amount to kidnapping or false imprisonment for extortive purposes.39 Federal
and state fair debt collection laws address precisely this type of conduct, but as discussed
below, there are complications in applying these statutes in the bail bond context.
i.

Fair Debt Collection Practices Act

The FDCPA, the primary federal statute that protects consumers from abusive behavior by debt
collectors, gives consumers the right to dispute alleged debts, and regulates how and when a
debt collector may contact debtors.40 Yet, for three reasons, the FDCPA may have limited
application to the commercial bail bond context.
First, because the FDCPA only regulates the conduct of third-party debt collectors, creditors
who originate a debt generally are excluded from the FDCPA‘s purview under the statute‘s
―
original creditor‖ provision.41 In much of the reported case law regarding bail bond collection
abuses, the objectionable conduct is primarily conducted by bail agents acting to collect debts
they originated, so their conduct is not covered by the FDCPA.42 Note, however, that the
original creditor exclusion often does not exist in state law analogs to the FDCPA.43 State laws
regulating debt collection, therefore, are a potential avenue for regulation of bail bond agents.
Second, the FDCPA exempts from the definition of ―
debt collector,‖ and therefore from
coverage under the statute, any person who collects or attempts to collect a debt owed or due
to another ―
to the extent that such activity is . . . incidental to a bona fide fiduciary obligation.‖44
Some courts have determined that for this fiduciary exception to apply, (1) the defendant must
have a ―
fiduciary obligation‖ and (2) the defendant‘s collection activity must be ―
incidental to‖
45
that fiduciary obligation. Although the law on this exemption is unsettled, a guarantor of an
obligation likely satisfies at least the first requirement because the guarantee establishes a
fiduciary relationship.46 At its core, a bail bond surety is a guarantee by the bail agent to the
38

See, e.g., London v. Gums, No. CIV.A. H-12-3011, 2014 WL 546914, at *2 (S.D. Tex. Feb. 10, 2014).
But see Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *6 (E.D. La. June 1, 2018) (dismissing
claims for false imprisonment).
40
See 15 U.S.C. § 1692 et seq.
41
15 U.S.C. § 1692a(6)(F)(ii) (the term ―
debt collector‖ excludes ―a
ny person collecting or attempting to collect on a debt
owed or asserted to be owed or due another to the extent such activity . . . concerns a debt which was originated by such a
person‖); see also National Consumer Law Center, Fair Debt Collection § 4.3.9 (9th ed. 2018).
42
See, e.g., Buckman v. Am. Banker‘s Ins. Co. of Florida, 924 F. Supp. 1156, 1158 (S.D. Fla. 1996), aff‟d, 115 F.3d 892
(11th Cir. 1997); Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210 (E.D. La. June 1, 2018); London v.
Gums, No. CIV.A. H-12-3011, 2014 WL 546914 (S.D. Tex. Feb. 10, 2014); Monroe v. Frank, 936 S.W.2d 654 (Tex. App.
1996).
43
See National Consumer Law Center, Fair Debt Collection § 16.2.3.3.1 (9th ed. 2018) (citing California, Connecticut,
Florida, Maryland, Michigan, New Hampshire, New York, North Carolina, Oregon, Pennsylvania, Texas, West Virginia, and
Wisconsin as states with state debt collection statutes that go beyond the FDCPA and apply to creditors collecting their own
debts); see also IOWA CODE § 537.1301; 940 CMR 7.03 (debt collection regulations issued by Massachusetts Attorney
General apply to original creditors).
44
15 U.S.C. § 1692a(6)(F)(i); see also National Consumer Law Center, Fair Debt Collection § 4.3.8 (9th ed. 2018).
45
Lima v. United States Dep‘t of Educ., 947 F.3d 1122, 1127 (9th Cir. 2020).
46
Advocates should note that there is conflicting law on the scope and meaning of the fiduciary exemption. The Fourth,
Fifth, and Eleventh Circuit decisions have held that student loan guarantee agencies are exempt under the fiduciary
exemption because of the federal requirements for the agency‘s handling of reserve funds in a fiduciary manner. The Ninth
Circuit, on the other hand, has rejected this position, holding that while a student loan guarantee agency may have a
fiduciary obligation, where its sole function was a post-default assignment to collect, the collection function was central,
39

Commercialized (In)Justice
Litigation Guide

court that the accused person shall appear, and thus a forfeiture resulting from a default of an
appearance bond agreement may be excluded from the FDCPA under this provision (assuming
the second requirement also is satisfied). Note, however, that bail bond premium financing and
other transactions related to bail bonds would not be so excluded, because they do not directly
involve a guarantor relationship.
Third, the McCarran-Ferguson Act may be invoked as a barrier to applying the FDCPA.
However, FDCPA may be viable if the challenged practice is sufficiently removed from the
―
business of insurance.‖ For example, advocates may be able to argue successfully that acts
undertaken exclusively to collect financed premiums are separate from the insurance product
represented by the premium itself.47
A federal district court decision, Buckman v. American Bankers Insurance Company, which
involved the application of the FDCPA to a bail bond transaction, illustrates how the invocation
of these limitations may play out in litigation. The plaintiff in Buckman was an indemnitor who
executed a mortgage as collateral for a bail bond on behalf of her daughter.48 The district court
determined, with little explanation, that because the debt involved (the bond forfeiture) was
incidental to a bona fide fiduciary obligation,‖ the bail bond company was not a debt collector,
and thus was excluded from FDCPA coverage.49 In support of its conclusion, the district court
emphasized only that the debt was originated by the bail bond company and that under Florida
law, ―
a bail bondsman receives collateral security in his ‗fiduciary capacity.‘‖50 On appeal, the
Eleventh Circuit upheld the district court, but relied on a different and simpler rationale––that the
bail agent was an original creditor, and thus excluded from the FDCPA.51
The Eleventh Circuit‘s decision in Buckman differs from a later decision in Barlow v. Safety
National Casualty Corporation,52 in which a federal district court allowed an FDCPA challenge to
a bail collection practice. In Barlow, which, like Buckman, involved collection of a forfeited bond
rather than a financed premium, the defendant had purchased the debt from the original
creditor after default. The case also named a debt collection agency as a second defendant.
The court held that Buckman was distinguishable because neither defendant was an
original creditor.53

rather than incidental, to its fiduciary duty, and it was subject to the FDCPA. National Consumer Law Center, Fair Debt
Collection § 4.3.8 (9th ed. 2018).
47
See Pearson, supra note 24.
48
Buckman v. Am. Banker‘s Ins. Co. of Florida, 924 F. Supp. 1156, 1157 (S.D. Fla. 1996), aff‟d, 115 F.3d 892 (11th Cir.
1997).
49
Id. at 1158.
50
Id.
51
Buckman v. Am. Bankers Ins. Co. of Fla., 115 F.3d 892, 894–95 (11th Cir. 1997).
52
Barlow v. Safety Nat‘l Casualty Corp., 856 F. Supp. 2d 828, 836–37 (M.D. La. 2012).
53
The Barlow court did not address issue of whether the underlying debt was a fiduciary obligation.

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Litigation Guide

ii.

State Analogs to the Fair Debt Collection Practices Act

State analogs to the FDCPA may provide relief where the FDCPA cannot.54 These laws often
do not exclude original creditors or fiduciaries.55 For example, in Monroe v. Frank,56 a Texas
bail bond agent‘s conduct was found actionable under the state‘s FDCPA analog, even though
the FDCPA did not provide protection, because the state statute lacked an original creditor
exclusion and featured a more expansive definition of ―
debt.‖57 In California, too, unfair debt
collection practices by bail bond companies are actionable under the state‘s Rosenthal Fair
Debt Collection Practices Act.58

2. State Unfair and Deceptive Acts and Practices Laws and Related State-Based
Consumer Protections: General Protections against Unfair, Deceptive, and
Abusive Practices
Beyond protecting against unfair and abusive debt collection practices, states have a varied
array of consumer laws that may provide useful protections against commercial bail bond
industry abuses. Every state has a type of Unfair and Deceptive Acts and Practices (―
UDAP‖)
law that provides broad protections against misconduct that harms consumers. This section
also flags other, more targeted, consumer laws adopted in some states that may provide
protection against certain bail bond agreement terms.
i.

Unfair and Deceptive Acts and Practices Laws

State UDAP laws provide a
private cause of action for
consumer fraud and other
types of misconduct
against consumers. These
laws can be a powerful
mechanism to address
abusive practices by
bail agents.

State UDAP laws provide a private cause of action for
consumer fraud and other types of misconduct against
consumers.59 These laws can be a powerful mechanism to
address abusive practices by bail agents. UDAP laws can
allow a creative advocate to connect conduct that may ―
feel
wrong‖ to a cognizable cause of action, provided that the
conduct can be demonstrated to be deceptive or unfair in
some way. At least 21 states exempt insurance companies
from the reach of their UDAP statutes, however. These
exemptions will insulate some practices of bail agents and
surety companies.60

See supra notes 41–47 and accompanying text. See generally National Consumer Law Center, Fair Debt Collection § 16
(9th ed. 2018).
55
See generally National Consumer Law Center, Fair Debt Collection § 16.2.3.3.1 (9th ed. 2018) (citing California,
Connecticut, Florida, Maryland, Michigan, New Hampshire, New York, North Carolina, Oregon, Pennsylvania, Texas, West
Virginia, and Wisconsin as states with state debt collection statutes that go beyond the FDCPA and apply to creditors
collecting their own debts); see also Iowa Code § 537.1301; 940 CMR 7.03 (debt collection regulations issued by
Massachusetts Attorney General apply to original creditors).
56
Monroe v. Frank, 936 S.W.2d 654 (Tex. App. 1996).
57
Id. at 660; see also London v. Gums, No. CIV.A. H-12-3011, 2014 WL 546914, at *10 (S.D. Tex. Feb. 10, 2014).
58
See Gonzalez, supra note 9, at 1402 n.94; see also Complaint, Merizier v. Nexus Services, Inc., No. CGC-19-580618
(Cal. Super. Ct. Nov. 7, 2019).
59
See CAROLYN CARTER, NATIONAL CONSUMER LAW CENTER, CONSUMER PROTECTION IN THE STATES: A 50-STATE EVALUATION OF
UNFAIR AND DECEPTIVE PRACTICES LAWS 1, 19 (2018).
60
See National Consumer Law Center, Unfair and Deceptive Acts and Practices § 2.3.1.2.1 (9th ed. 2016); CARTER, supra
note 59, at 19.

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Litigation Guide

Newer Industry Players: Private Guarantors of Immigration Bonds
In addition to bail bond agents and the surety companies that underwrite them, other industry players have
cropped up in recent years to occupy new roles in the commercial bail market. For an additional fee, these
companies may operate to procure bonds for accused persons, provide GPS monitoring, or provide other
supervision services. For the consumer, these new actors may simply represent a source of yet more unaffordable
debt that must be shouldered to secure personal liberty.
Typical of this newer kind of industry player is Libre by Nexus, a company that procures immigration detention
bonds from third-party surety companies (what it calls ―
immigration bond securitization‖) and provides GPS
monitoring services to individuals being held in federal immigration detention subject to money bail, all while
61
62
charging substantial additional fees. Libre brands itself as a champion of immigrants and a reuniter of families.
Over the course of many months, however, individuals that use Libre‘s services may end up paying a sum greater
63
than the amount of their bond just in recurring GPS fees. The company has also been accused of making false
and misleading statements and failing to disclose required terms. And it has reportedly used threats and
64
misrepresented its affiliation with federal immigration authorities to extort payments from its customers.
65

Litigants have used the FDCPA to pursue abusive debt collection practices by Libre. In denying Libre‘s motion to
dismiss, one federal district court rejected Libre‘s argument that because it did not collect debts that are owed or
66
due to another, it did not satisfy the FDCPA‘s definition of a debt collector. In that case, the plaintiffs alleged that
the monthly ―
GPS tracker‖ fee that Libre charges immigration detainees does not primarily compensate Libre for
67
the use of the GPS tracker itself, but rather represents a hidden indemnification fee. The court agreed with the
plaintiffs, finding that a major part of Libre‘s business model is to collect fees from immigration detainees to
indemnify the immigration bonds it procures from third-party immigration detention bond companies. The court
reasoned that because a portion of the collected fees go to third-party companies, Libre collects debts on behalf of
68
another, and held that the plaintiffs stated a claim under the FDCPA. As of April 2020, the case is stayed to allow
69
the parties to finalize a settlement agreement.
61

See Adolfo Flores, Immigrants Desperate to Get Out of US Detention Can Get Trapped by Debt, BUZZFEED (July 23,
2016), (―L
ibre by Nexus customers sign a contract agreeing to a nonrefundable $620 initial fee, as well as paying the $420
monthly rental fee for the tracking bracelet and a nonrefundable one-time 20 percent premium to the bond issuer. If a client
pays down 80 percent of the bond and agrees to cover the remaining 20 percent in installments, Libre by Nexus will remove
the tracking device.‖); see also HIGHSMITH, COMMERCIALIZED (IN)JUSTICE, supra note 1, at 32.
62
See Complaint ¶ 5, Garcia-Diaz v. Libre by Nexus Inc., No. CL19-4356 (Va. Cir. Ct. Aug. 8, 2019) (citing Libre by Nexus
website, which linked to ―Sta
tement from Nexus Services CEO Mike Donovan Regarding DAPA/DACA Supreme Court
Arguments‖ and including statements including ―
WE REUNITE FAMILIES‖).
63
Flores, supra note 59.
64
See, e.g., id.; Order on Motion to Compel, Motion to Dismiss, and Motion for Sanctions at 4–5, Quintanilla Vasquez et al
v. Libre by Nexus, Inc., 4:17-cv-00755-CW (N.D. Cal., August 20, 2018); Inti Pacheco, et al., Company that Bails out
Immigrants is Accused of Abusive and Fraudulent Tactics, UNIVISION (April 30, 2018).
65
See, e.g., Third Amended Class Action Complaint ¶¶ 167–73, Quintanilla Vasquez et al v. Libre by Nexus, Inc., 4:17-cv00755-CW (N.D. Cal. Dec. 6, 2018), ECF No. 102 (alleging that Libre used false, deceptive, or misleading representations
or means, including falsely misrepresenting or implying that it is affiliated with the United States, falsely representing
implying that non-payment of a debt will result in the arrest or imprisonment of a person or the seizure, garnishment, or
attachment of a person‘s property or wages, when such action is not lawful or when Libre has no intention of taking such
action). More research is warranted on the viability of this legal theory, but companies like Libre, which generate significant
income from GPS and other equipment rental fees, also may be ignoring the requirements of the federal Consumer Leasing
Act, 15 U.S.C. § 1667 et seq., and state analogs.
66
Order on Motion to Compel, Motion to Dismiss, and Motion for Sanctions at 13, Quintanilla Vasquez et al v. Libre by
Nexus, Inc., 4:17-cv-00755-CW (N.D. Cal. June 9, 2017), ECF No. 28.
67
Second Amended Class Action Complaint ¶ 65, Quintanilla Vasquez et al v. Libre by Nexus, Inc., 4:17-cv-00755-CW
(N.D. Cal. August 20, 2018), ECF No. 76.
68
Order on Motion to Compel, Motion to Dismiss, and Motion for Sanctions at 13–14, Quintanilla Vasquez et al v. Libre by
Nexus, Inc., 4:17-cv-00755-CW (N.D. Cal. August 20, 2018), ECF No. 76.
69
See Order on Joint Stipulation Staying Case, Quintanilla Vasquez et al v. Libre by Nexus, Inc., 4:17-cv-00755-CW (N.D.
Cal. Feb. 18, 2020), ECF No. 126; Order Setting Deadline for Mediation and Requesting Mediation Reports, Quintanilla
Vasquez et al v. Libre by Nexus, Inc., 4:17-cv-00755-CW (N.D. Cal. Apr. 3, 2020), ECF No. 131.

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Litigation Guide

The conduct generally actionable under UDAP laws is stated broadly as ―
unfair‖ or ―
deceptive,‖
making it inclusive of a wide range of industries and practices. Deceptive or unfair provisions in
contracts, such as unenforceable waivers of bankruptcy rights or open-ended provisions
collateralizing future property also may be actionable under UDAP laws under this definition.70
Similar claims have been successful outside of the bail bond context.71 For instance, the
California and Massachusetts Supreme Courts have ruled that a landlord commits an unfair and
deceptive practice by including illegal and unenforceable terms in a lease agreement even if the
terms are not enforced.72 The tenants are deceived in such instances because they are likely to
belief that the lessor has the authority to enforce the contract.
Additionally, a violation of a statutory or regulatory standard sometimes can constitute a ―
per se‖
UDAP violation, even where these standards do not themselves provide for a separate private
right of action,73 under the theory that acting in violation of the law is an unfair practice. For
example, bail agents who illegally orchestrate the arrest of an accused person for failure to pay
a premium installment, who violate rules related to disposition of collateral,74 or who charge fees
in excess of what is allowed by law75 may be subject to UDAP claims.
Some states, however, have rejected a ―
per se‖ approach to technical violations of other laws,
requiring in addition that the practice be shown to be unfair or deceptive and that the consumer
suffered actual damages.76 For this reason, litigants bringing a case of first impression in a
jurisdiction are advised to limit claims of per se UDAP violations to cases based on statutory
violations that also involve serious consumer abuses, rather than purely technical violations of
other statutes.77 Nevertheless, in states that do not take a per se approach, violation of another
statute may serve as an evidentiary factor that could be part of a wider case to show a practice
to be unfair or deceptive.78

See National Consumer Law Center, Unfair and Deceptive Acts and Practices § 5.6.3.3 (9th ed. 2016).
See id.
72
People v. McKale, 602 P.2d 731 (Cal. 1980); Leardi v. Brown, 474 N.E.2d 1094 (Mass. 1985). But cf. Hershenow v.
Enter. Rent-A-Car Co., 840 N.E.2d 526 (Mass. 2006) (illegal clause that restricted collision damage waiver did not cause
loss to consumers who had returned rental cars without damage, so they could not maintain UDAP claim); Commonwealth
v. Monumental Properties, Inc., 329 A.2d 812 (Pa. 1974) (unenforceable provisions not per se unfair where provisions were
enforceable in certain circumstances); Perry v. Island Sav. & Loan Ass‘n, 684 P.2d 1281 (Wash. 1984) (good faith
enforcement of arguably valid due-on-sale clause not unfair).
73
See, e.g., Kasky v. Nike, Inc., 45 P.3d 243 (Cal. 2002); Yale New Haven Hosp., Inc. v. Mitchell, 662 A.2d 178, 183 (Conn.
Super. Ct. 1995), republished as corrected, 683 A.2d 1362, 1367 (Conn. Super. Ct. 1995); Dist. Cablevision Ltd. P‘ship v.
Bassin, 828 A.2d 714 (D.C. 2003); see also National Consumer Law Center, Unfair and Deceptive Acts and Practices §
3.2.7 (9th ed. 2016) (generally discussing per se UDAP violations and listing cases finding violations of other laws to be per
se UDAP violations); National Consumer Law Center, Fair Debt Collection § 16.3.6 (9th ed. 2018).
74
See Habicht v. Sullivan, No. CV040833934, 2006 WL 1644606, at *3 (Conn. Super. Ct. May 25, 2006) (suing for failure to
return truck that was collateral for bail surety bond).
75
See Ramos v. Int‘l Fidelity Ins. Co., 34 N.E.3d 737, 741 (Mass. App. Ct. 2015).
76
See, e.g., Morales v. Walker Motors Sales, Inc., 162 F. Supp. 2d 786, 790 (S.D. Ohio 2000); Riopta v. Amresco
Residential Mortgage Corp., 101 F. Supp. 2d 1326, 1332 (D. Haw. 1999) Hawaii Cmty. Fed. Credit Union v. Keka, 11 P.3d
1, 14 (Haw. 2000) Mid-Am. Nat‘l Bank v. First Sav. & Loan Ass‘n, 515 N.E.2d 176, 182 (Ill. App. Ct. 1987) (disclosure
violation of National Flood Act not per se UDAP violation); Coffey v. Peoples Mortgage & Loan, 408 So. 2d 1153, 1155 (La.
Ct. App. 1981) (violation of technical usury requirement is not per se violation); Griffin v. Allstate Ins. Co., 44 Pa. D. & C.4th
261, 264 (Pa. C.P. Phila. Cty. 1999); see also National Consumer Law Center, Unfair and Deceptive Acts and Practices
§ 3.2.7.3.5 (9th ed. 2016).
77
See National Consumer Law Center, Unfair and Deceptive Acts and Practices § 3.2.7.4 (9th ed. 2016).
78
See, e.g., Culbreath v. Golding Enters., L.L.C., 872 N.E.2d 284, 288 (Ohio 2007); State ex rel. Stovall v. DVM Enters.,
Inc., 62 P.3d 653, 657 (Kan. 2003); State ex rel. Stovall v. ConfiMed.com, 38 P.3d 707, 712 (Kan. 2002).
71

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ii.

Other State Consumer Protection Laws Applicable to Bail Bond Agreement Terms

In addition to more general UDAP laws, some states have specific consumer protections that
may protect consumers from unfair bail bond agreement terms. For example, in the context of
consumer transactions, some states require that certain disclosures be provided to cosigners or
guarantors;79 prohibit or limit waiver of bankruptcy or other consumer rights;80 and limit the
extent to which attorney‘s fees may be assessed.81 And, as noted on page 11, states generally
regulate the rates that bail bond agents may charge. Regulation of these rates may complicate
private legal challenges in some cases, but could support private litigation in other instances.
Because these laws vary across jurisdictions, advocates should research the applicable laws in
their jurisdiction. If there are laws that disallow certain agreement terms or other conduct by the
bail bond agent but those laws do not provide a private right of action, advocates should
consider using UDAP claims as a vehicle to seek relief, as previously discussed.

3. Truth in Lending Act: Disclosure Requirements
The Truth in Lending Act (―
TILA‖)82 is a federal statute that requires entities that extend credit to
give the consumer a detailed and accurate disclosure of the financing terms prior to
consummating the transaction. One of the primary disclosures regulated by TILA is the ―
finance
83
charge‖—that is, how much the extension of credit will ultimately cost the consumer.
TILA standardizes the manner in which borrowing costs are calculated and disclosed.84 The
statute reflects Congress‘s effort to guarantee the accurate and meaningful disclosure of the
costs of consumer credit, thereby enabling consumers to make informed choices in the credit
marketplace and avoid abusive lending.85 The law is implemented by Regulation Z, under which
a creditor must make a number of specific disclosures in relation to the cost of credit clearly and
conspicuously in writing, in a form that the consumer may keep.86 Remedies available under
TILA include actual damages, statutory damages (though class actions are limited to $1 million
or 1% of a creditor‘s net worth, whatever is less), and attorney‘s fees.87 Injunctive and
declaratory relief are probably available as well, although not specifically mentioned in
the statute.88
The most obvious application of TILA in the commercial bail bonds context is in the area of
financed premiums. TILA may provide a cause of action to the extent that borrowers
do not receive statutorily adequate disclosures of the cost of this financing.89
79

See, e.g., IOWA CODE § 537.3208.
See, e.g., IOWA CODE § 537.7103(5)(b).
81
See, e.g., IOWA CODE § 537.2507.
82
15 U.S.C. §§ 1601–1667f.
83
15 U.S.C. §1605(a); see also 12 C.F.R. § 1026.4.
84
Id.; Truth in Lending (Regulation Z), 12 C.F.R. §§ 226.1–226.59; see also National Consumer Law Center, Truth in
Lending (10th ed. 2019).
85
15 U.S.C. § 1601(a) (stating that the statutory purpose is ―t
o assure a meaningful disclosure of credit terms so that the
consumer will be able to compare more readily the various credit terms available to him‖).
86
12 C.F.R. § 1026.
87
15 U.S.C. § 1640; see also National Consumer Law Center, Truth in Lending § 11 (10th ed. 2019).
88
National Consumer Law Center, Truth in Lending § 11.4.1 (10th ed. 2019).
89
See, e.g., Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *4 (E.D. La. June 1, 2018).
80

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There are two primary barriers to bringing TILA claims in the
bail bond context: (1) the McCarran-Ferguson Act and (2)
TILA may provide a
whether the various fees associated with financed premiums
cause of action to the
meet TILA‘s definition of ―
finance charge.‖ Buckman v.
extent that borrows do
American Bankers Insurance Company of Florida exemplifies
not receive statutorily
how the McCarran-Ferguson Act may serve as an obstacle to
adequate disclosures.
TILA claims.90 The plaintiff in Buckman was an indemnitor who
had executed a mortgage as collateral for a bail bond on
behalf of her daughter. Notably, Buckman did not involve a financed premium, but rather the
forfeiture of the bond after an accused person‘s failure to appear. The plaintiff alleged that the
surety company violated TILA by failing to provide the requisite disclosures. In the federal
district court, the surety company successfully invoked the McCarran-Ferguson Act to dismiss
the plaintiff‘s TILA claim (as well as her FDCPA claim, see page 17).91 The court explained that
the McCarran-Ferguson Act precludes the application of federal statutes to ―
the business of
insurance‖ if those federal statutes do not ―
specifically relate to the business of insurance.‖92
Noting that the Fifth Circuit held previously that TILA does not specifically relate to the business
of insurance, the court reasoned that if the defendants‘ activities constituted the ―
business of
93
insurance,‖ they would be ―
immune‖ from TILA. The court ultimately determined that the
transaction at issue—the bail bondsman‘s posting of a criminal bail bond insured by the bond
surety for the plaintiff‘s daughter—was part of the business of insurance.94 Therefore, the court
held that the McCarran-Ferguson Act precluded the application of TILA.
The Eleventh Circuit did not rule on the McCarran-Ferguson argument, but rather affirmed on
different grounds, holding that the plaintiff‘s execution of a contingent note and mortgage as
part of the bail bond transaction was not an extension of credit subject to TILA (again, there was
no financed premium in this case).95 TILA defines ―
credit‖ as ―
the right granted by a creditor to a
debtor to defer payment of debt or to incur debt and defer its payment.‖96 The Eleventh Circuit
rejected the plaintiff‘s argument that the contingent note and mortgage were distinct from the
bail bond transaction and concluded that ―
executing an agreement to indemnify a bail bond
surety and providing a note and mortgage to facilitate any indemnification that may be become
necessary‖ does not constitute an extension of ―
credit‖ under TILA.97
In any event, the McCarran-Ferguson Act does not prevent the federal government from
regulating the financing of insurance premiums.98 The financing of premiums does not
constitute the ―
business of insurance‖—even when the same company that provides insurance
90

Buckman v. Am. Bankers Ins. Co. of Fla, 924 F. Supp. 1156, 1157–58 (S.D. Fla. 1996), aff‟d, 115 F.3d 892 (11th Cir.
1997). But see Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *4 (E.D. La. June 1, 2018) (concluding
that the McCarran-Ferguson Act did not preempt the plaintiffs‘ TILA claims).
91
Buckman, 924 F. Supp. at 1157–58.
92
Id.; see also Am. Bankers Ins. Co. of Fla. v. Inman, 436 F.3d 490, 493 (5th Cir. 2006) (―
Under the McCarran-Ferguson
Act, a state law reverse preempts federal law only if: (1) the federal statute does not specifically relate to the ‗business of
insurance;‘ (2) the state law was enacted for the ‗purpose of regulating the business of insurance;‘ and (3) the federal
statute operates to ‗invalidate, impair, or supersede‘ the state law.‖).
93
Buckman, 924 F. Supp. at 1157.
94
See id.
95
See Buckman v. Am. Bankers Ins. Co. of Fla., 115 F.3d 892, 894 (11th Cir. 1997).
96
15 U.S.C. § 1602(f).
97
Buckman, 115 F.3d at 893–94.
98
National Consumer Law Center, Truth in Lending § 9.3.4.2.2.2 (10th ed. 2019).

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also finances the premium.99 Courts generally have distinguished financed premiums from the
―
business of insurance‖ for the purposes of TILA claims.100 Thus, TILA should apply to financed
bail premium transactions. This argument has been preliminarily successful in the bail bond
context.101 One district court pointed out that ―
[i]t would be anomalous to hold that [an insurance
company‘s] premium financing activities are the ‗business of insurance‘ but that the identical
activities of the finance company . . . are not.‘‖102 Therefore, ―
it does not make sense that
Defendants‘ financing activities should be immune from TILA merely because they are
conducted in the context of bail bonding.‖103
Plaintiffs also may face arguments that a TILA claim regarding a financed premium should be
dismissed because the extension of credit was not subject to a ―
finance charge.‖ TILA defines a
―
finance charge‖ as the ―
sum of all charges, payable directly or indirectly by the person to whom
the credit is extended, and imposed directly or indirectly by the creditor as an incident to the
extension of credit.‖ The finance charge ―
does not include charges of a type payable in a
104
comparable cash transaction.‖ As a practical matter, bail bond agents often fail to explain or
sufficiently document financed premium transactions, including the purpose of add-on fees,
which can make it difficult to respond to arguments that certain fees do not constitute a finance
charge. In one case, however, the plaintiffs preliminarily succeeded in arguing that certain fees
associated with financed premiums met the definition of a finance charge. The court in Egana v.
Blair‟s Bail Bonds, Inc. found that an additional charge for which no explanation was given
could constitute a finance charge under TILA, and denied the defendants‘ motion to dismiss on
that basis.105

4. Article 9 of the Uniform Commercial Code and Other State Laws: Regulating the
Receipt and Repossession of Collateral
Many bail bond agents require the accused person or their indemnitor to sign over collateral,
such as automobiles, homes, or other property or assets, to cover the full bail amount.106
Typically, the bond agreement will allow the bail bond agent to sell the collateral if the accused
person fails to appear at future court hearings.107 Bail bond agents often require collateral not
99

See Pearson, supra note 24.
See, e.g., Cody v. Cmty. Loan Corp. of Richmond Cnty., 606 F.2d 499, 502 (5th Cir. 1979) (holding that ―p
remium
financing by an insurance company in connection with the sale of an insurance policy is not the ‗business of insurance‘ for
McCarran Act purposes, and that [TILA] is thus applicable to such a loan transaction‖).
101
See Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *4 (E.D. La. June 1, 2018). The First Amended
Complaint (―FAC‖) describes the process through which Defendant bail bond company agreed to allow plaintiffs to finance
the premium for the bond, but utilized contracts that violate the Truth in Lending Act, 15 U.S.C. § 1601 et seq., by failing to
make necessary disclosures, and state contract, conversion, and usury laws by requiring payment of amounts above what
state law allows, including paying daily fees for ankle monitors supplied by another company. First Amended Complaint ¶¶
125–29, Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899 (E.D. La. Sept. 12, 2017), ECF. No. 26.
102
Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *4 (E.D. La. June 1, 2018) (quoting Perry v. Fidelity
Union Life Ins. Co., 606 F.2d 468, 472 (5th Cir. 1979)).
103
Id.
104
15 U.S.C. § 1605(a); see also 12 C.F.R. § 1026.4.
105
Egana, 2018 WL 2463210, at *5.
106
COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 14.
107
AM. CIVIL LIBERTIES UNION OF WASHINGTON, NO MONEY, NO FREEDOM: THE NEED FOR BAIL REFORM 3 (2016); see also
JUSTICE POLICY INSTITUTE, FOR BETTER OR FOR PROFIT: HOW THE BAIL BONDING INDUSTRY STANDS IN THE W AY OF FAIR AND
EFFECTIVE PRETRIAL JUSTICE 15 (2012), (―Ifthe person or their family is unable to pay, the bondsman will seize and liquidate
any collateral used to secure the bond such as a home or property.‖).
100

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only to protect themselves and the surety company financially in case a bond is forfeited, but
also to enforce full payment of financed premiums.
Bail agents commonly engage in illegal and abusive practices in connection with the
repossession of such collateral. For example, a bail agent may illegally attempt to force bail
bond cosigners to turn over property used as collateral even in cases where the accused
person complied with the terms of bail.108 A recent report by New York City‘s comptroller found
evidence that ―
some companies . . . fail[] to return collateral as required under contract.‖109

Bail bond agents
commonly engage in
illegal and abusive
practices in
connection with
repossession of
collateral that an
accused person or
their loved one signed
over to cover the full
bail amount.
Advocates may be
able to use Article 9
of the UCC to protect
consumers from
these practices.

In regulating repossessions and foreclosures related to bail bonds,
many states rely entirely on laws of general applicability dealing with
these topics, though some have imposed additional bail bondspecific requirements.110 Laws of general applicability that provide a
vehicle to regulate repossession of bail bond collateral include the
Uniform Commercial Code (―
UCC‖). For example, Article 9 of the
UCC deals with disposition of collateral other than real property (i.e.,
real estate), and regulates the use of so-called ―
self-help‖ to obtain
111
collateral. An advocate first should determine whether a valid
security interest that can be enforced in fact exists. Without a valid
security interest, a repossession is simply theft and conversion.
Less sophisticated or experienced bail agents may not always follow
the formalities necessary to establish a security interest.

Even where the security interest is valid, the way the repossession
is carried out may give rise to actions for damages, such as failure
to give proper notices of sale and disposition of collateral.112 In
addition, statutory damages may be available for the use of violence
or other illegal tactics under the UCC‘s prohibition on ―
breach[ing]
113
the peace‖ during repossession. Breaches of the peace may
include violence,114 breaking into private property or enclosures to take a vehicle,115 or
impersonating a police officer,116 though they are not limited to these instances. Indeed,
advocates generally can argue that a breach of the peace occurs any time the person executing
the repossession violates another law to accomplish it.117 Violation of UCC provisions or special

108

See, e.g., London v. Gums, No. CIV.A. H-12-3011, 2014 WL 546914, at *2 (S.D. Tex. Feb. 10, 2014); Cason v. 1 Bail
Bonds, No. CVCV053198 (Iowa Dist. Ct. for Polk Cnty. Mar. 10, 2017).
109
The Public Cost of Private Bail: A Proposal to Ban Bail Bonds in NYC, New York City Comptroller (January 17, 2018).
110
See, e.g., MD. CODE REGS. 31.03.05.13–.14 (2018) (requiring full description of collateral by affidavit, and requiring
immediate return of collateral after bond agreement successfully discharged less costs); NEV. REV. STAT. ANN. § 697.320
(West 2017) (collateral must be ―re
asonable in relation to the face amount of the bond;‖ collateral cannot be transferred to
another, or transported outside of the state; collateral must not be mingled with bail agent or surety‘s assets; owner entitled
to any surplus after forfeiture).
111
U.C.C. §§ 9-101 to 9-709 (AM. LAW INST. & NAT‘L CONF. OF COMM‘RS ON UNIF. STATE LAWS 2017).
112
Id. § 9-611.
113
Id. § 9-609.
114
See generally Annotation, Liability for Assault or Trespass in Forcibly Retaking Property Sold Conditionally, 105 A.L.R.
926 (1936).
115
Id.
116
See e.g., Fleming-Dudley v. Legal Investigations, Inc., No. 05 C 4648, 2007 WL 952026, at *10–13 (N.D. Ill. Mar. 22,
2007).
117
See generally Annotation, Liability for Assault or Trespass, supra note 114.

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bail bond collateral provisions that may exist in state law also may give rise to a claim under
state UDAP laws (see page 18) even where these statutes themselves do not provide a right
of action.
Demands for collateral may create other legal responsibilities for bail bond agents. For
example, a bail agent who receives collateral in connection with a bail transaction may have a
fiduciary duty to the party posting the collateral, which can create additional obligations to make
affirmative disclosures about material facts.118 The failure to disclose material facts may
constitute constructive fraud.119
In an unpublished decision, the California Court of Appeal indicated that claims for breach of
fiduciary duty and constructive fraud (concealment in the context of a fiduciary relationship120)
may be viable.121 In that case, the appellants—loved ones of the accused person—pledged a
rental property they owned as collateral for a bond. Because the accused person had been
deported, he did not appear at his arraignment and the bond was declared forfeited. To satisfy
the bond, the appellants agreed to sell their property to the bail bond agent. However, three
days after the parties signed the agreement, the bail agent filed a motion to exonerate the bond.
He did not disclose that fact to the appellants. Shortly after escrow on the property sale closed,
the bond was exonerated. The appellants filed an action alleging that they were defrauded
when the bail agent failed to disclose that he was seeking to have the bond exonerated when
they entered into the agreement to sell the property and when escrow was pending and that the
bail agent received their property even though he was not liable on the bond.122 A jury
determined that the bail agent did not conceal or suppress any material fact, and the trial court
entered judgment in favor of the respondents. However, the appellate court reversed the
judgment on the appellants‘ fiduciary duty/constructive fraud claim.123 It determined that the bail
agent and surety owed a fiduciary duty to the appellants concerning the property pledged as
collateral and concluded that the lower court failed to properly instruct the jury on both fiduciary
duty and constructive fraud.124

5. Antitrust Law: Protection against Anticompetitive and Collusive Behavior
As discussed (see page 11), the vast majority of bail bonds are underwritten by a small handful
of large insurance corporations.125 This feature of the industry—combined with the particular
118

See, e.g., 10 CAL. CODE REGS. § 2088 (2018) (establishing that ―[a
]ny bail licensee who receives collateral in connection
with a bail transaction shall receive such collateral in a fiduciary capacity‖).
119
Cardenas v. American Sur. Co., No. D041392, 2004 WL 206286, at *8 (Cal. Ct. App. Feb. 4, 2004) (noting in the context
of a bail bond, ―[t
]he failure of the fiduciary to disclose a material fact to his principal which might affect the fiduciary‘s
motives or the principal‘s decision, which is known (or should be known) to the fiduciary, may constitute constructive fraud‖).
120
Salahutdin v. Valley of California, Inc., 24 Cal. App. 4th 555, 562 (Cal. Ct. App. 1994) (―[A]
s a general principle
constructive fraud comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or
confidence which results in damage to another even though the conduct is not otherwise fraudulent. Most acts by an agent
in breach of his fiduciary duties constitute constructive fraud.‖) (emphasis omitted).
121
Cardenas, 2004 WL 206286, at *8; see also People v. V.C. Van Pool Bail Bonds, 246 Cal. App. 3d 303, 306 n.2 (Cal. Ct.
App. 1988) (stating that failure of a bail bond agent who holds collateral to notify a principal about a bond exoneration
hearing may be a breach of fiduciary duty).
122
Cardenas, 2004 WL 206286, at *1.
123
Id. at *10.
124
Id. at *8; see also id. at *16 (―
ASC had a fiduciary duty to appellants with regard to the rental property given as collateral
for the bond.‖).
125
COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 6–7; see also HIGHSMITH, supra note 3, at 16–17.

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vulnerability of bail bond consumers and general lack of effective oversight—creates an
environment where anticompetitive behavior can take root.
Advocates may be able to use laws prohibiting collusive and
anticompetitive behavior to protect consumers from unfair
and abusive bail industry practices. A recently filed class
action lawsuit, Crain v. Accredited Surety and Casualty
Company,126 now consolidated with another case and
referred to as In re California Bail Bond Antitrust Litigation,127
uses federal and state antitrust protections to challenge such
practices. With the caveat that it is ongoing and still at the
motion to dismiss stage, this case provides one example of
how advocates potentially may use antitrust law to protect
consumers harmed by collusive practices in the bail industry.

Advocates may be
able to use laws
prohibiting collusive
and anticompetitive
behavior to protect
consumers from unfair
and abusive bail
industry practices.

The plaintiffs In re California Bail Bond Antitrust Litigation have alleged that the surety
companies that underwrite bail bonds in California, in concert with bail agents and others, have
violated antitrust law by conspiring to fix the prices of the premiums paid for commercial bail
bonds. According to the consolidated complaint, bail agents and surety companies in the state
have coordinated to inflate the percentage of the bond required as a nonrefundable premium
and have refused to compete to offer lower prices through rebating even though such
discounting is clearly permitted by law.128 The complaint further alleges that the defendants
have enlisted or created industry associations to enforce their conspiracy, used mandated bail
agent training courses to enforce the cartel, and acted together to punish departures from
the conspiracy.129
In April 2020, the federal district court granted in part and denied in part the defendants‘
motions to dismiss. The court dismissed with prejudice the plaintiffs‘ Sherman Act (federal
antitrust law) claim that the defendants conspired to submit uniform rates to the California
Department of Insurance, reasoning that the claim is barred by the McCarran-Ferguson Act.130
However, the court denied the motions to dismiss other claims. It allowed the plaintiffs‘
Sherman Act claim regarding the alleged agreement not to rebate to proceed, concluding that
that claim was not barred by the McCarran-Ferguson Act, the state action doctrine, or the filedrate doctrine.131 The court also allowed the plaintiffs‘ Cartwright Act (state antitrust law) claims
regarding both rebating and uniform rate filing, as well as their California Unfair Competition Act
126

Class Action Complaint, Crain v. Accredited Sur. & Casualty Co., No. 4:19-cv-02165-JST (N.D. Cal. Mar. 8, 2019), ECF
No. 1-3.
127
Consolidated Amended Class Action Complaint, In re California Bail Bond Antitrust Litigation, No. 3:19-CV-000717-JST
(N.D. Cal. June 13, 2019), ECF No. 46.
128
Id. ¶¶ 66–102. The federal district court has ―s
orted these allegations into two categories: (1) the fixing of premium rates,
and (2) the prevention of rebating,‖ concluding that, in effect, the plaintiffs have alleged that the surety defendants have
fixed the maximum as well as the minimum price of bail bonds. Order Granting in Part and Denying in Part Motions to
Dismiss, In re California Bail Bond Antitrust Litigation at 3–4, No. 3:19-CV-000717-JST (N.D. Cal. Apr. 13, 2020), ECF No.
91.
129
Consolidated Amended Class Action Complaint, In re California Bail Bond Antitrust Litig. ¶¶ 66–106., No. 3:19-CV000717-JST (N.D. Cal. June 13, 2019), ECF No. 46.
130
Order Granting in Part and Denying in Part Motions to Dismiss, In re California Bail Bond Antitrust Litigation at 12, No.
3:19-CV-000717-JST (N.D. Cal. Apr. 13, 2020), ECF No. 91.
131
Id. at 12–14.

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claim, to proceed.132 Although the court dismissed the claims against the surety defendants, the
bail agency defendants, and certain industry association defendants, it gave the plaintiffs the
opportunity to amend their complaint to cure the pleadings.133
Advocates should note that although the sort of collusion alleged in In re California Bail Bond
Antitrust Litigation may be observed elsewhere in the bail and corrections industry, similar fact
patterns may require significant resources to uncover. Accordingly, advocates considering a
similar cause of action should consult with litigators with antitrust experience before filing
a complaint.

E. Theories of Liability for Reaching the Surety
As discussed (see page 11), in most states, bail bonds are underwritten by large insurance
companies that contract with bail bond agents to receive a share of consumers‘ payments. Most
states require bail bond agents to secure sureties for the bonds they write.134
Though there are thousands of bail bond companies that operate throughout the United States,
only a handful of large insurers underwrite the majority of bail bonds posted each year and thus
keep the entire industry running.135 Though their role is largely hidden from public view, these
sureties play a critical role in our commercial bail system. The practices, policies, and actions of
bail surety companies have a wide impact on agents, consumers, and the justice system.
Surety insurers generally receive 10% of each bail bond
premium paid to the bail agent. But these underwriters face
Though their role is
almost no risk. Bail bonds rarely are declared forfeited, even
largely hidden from
when a person fails to appear, in part due to rules that require
public view, sureties play
courts to essentially sue the bail agent in order to collect a
a critical role in our
forfeiture.136 Thus, even when bond is forfeited, the bail agent
commercial bail system.
retains the primary obligation for paying the forfeiture. The
surety company has to pay only if the bail agent cannot afford to
pay it itself—an unlikely outcome, due to the fact that sureties typically require bail agents to
pay an additional percentage of each bail bond premium, separate from the surety fee, into a
―
build-up fund‖ that the surety insurer holds in reserve to cover any forfeitures.137 In short,
surety insurers only pay bail forfeitures in the rare circumstance that (1) the accused person
fails to appear for a court appearance, (2) the court orders that the bail be forfeited, (3) the bail
agent does not have enough money on hand to pay the bond, and (4) there is not enough
money in the bail agent‘s build-up fund with the surety to cover the forfeiture.

132

Id. at 32. The court rejected the defendants‘ argument that the filed-rate doctrine bars the Cartwright Act claim. Id. at 15.
Id. at 32.
134
See, e.g., CAL. INS. CODE § 1802.1 (requiring bail agent applicants to file with the state a notice of appointment, executed
by a surety insurer, ―a
uthorizing that applicant to execute undertakings of bail and to solicit and negotiate those
undertakings‖ on behalf of the surety insurer).
135
COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 22.
136
JUSTICE POLICY INSTITUTE, supra note 107, at 15.
137
COLOR OF CHANGE & AM. CIVIL LIBERTIES UNION, supra note 7, at 14, 24.
133

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Although bail agents generally operate under a formalized power
Ensuring that
of attorney or other document establishing agency, and often have
exclusive relationships with one or two surety companies,
sureties share
establishing that the surety company should be held liable for
responsibility for
wrongful acts committed by bail agents still can prove difficult.138
the actions of bail
Nonetheless, ensuring that sureties share responsibility for the
bond agents is
actions of bail agents is critical to systemic reform. Otherwise,
critical to
advocates may end up playing whack-a-mole with small bail bond
systemic reform.
agencies. Moreover, holding sureties responsible may be
important to ensuring those harmed by the industry‘s conduct are
able to receive full compensation for the damages they suffer, particularly in large class actions
where small bail companies may have limited reserves to pay a judgment.
As an initial matter, theories of direct liability, such as negligence, do not appear to provide a
promising path to holding sureties liable. No court has directly addressed the question of
whether insurance companies that underwrite bail bonds owe a duty of care to individuals
released on those bonds.139 In other contexts, however, courts have rejected the argument that
sureties owe a common law duty of care to third parties arising out of their
underwriting activities.140
The following sections thus explore more promising theories of liability for reaching the surety.
In particular, advocates may be able to use agency principles or other theories of secondary
liability to hold sureties liable for the actions of bail agents.

1. Tort Liability through Agency Principles
Plaintiffs have had some success arguing that sureties are vicariously liable for the torts of bail
bond companies. In particular, plaintiffs have survived summary judgment by using the
contractual agreements between the insurer and the bail bond companies to raise a genuine
issue of material fact as to whether the bail companies are agents of the insurers, thereby
making the insurers liable for the torts the bail companies commit. A key issue that plaintiffs

138

Compare Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *6 (E.D. La. June 1, 2018) (dismissing
false imprisonment and conversion claims premised on an agency theory because plaintiffs failed to allege facts showing
the surety defendants had the right to exercise physical control over the bail bond agent defendants), with Ramos v. Int‘l
Fidelity Ins. Co., 34 N.E.3d 737, 742 (Mass. App. Ct. 2015) (holding that insurer was vicariously liable for agent‘s actions in
overcharging premiums).
139
See, e.g., Irene v. Seneca Ins. Co., 337 P.3d 483, 485 (Wyo. 2014) (declining to address issue defendant insurer raised
on appeal of whether an insurer that ―d
id nothing more than serve as the surety on a bail bond, [owe] a duty of care to
plaintiff, who was injured by the bailed defendant in an automobile accident after he had been released on the bond that
[defendant] insured‖).
140
See, e.g., Gray v. Derderian, 404 F. Supp. 2d 418, 422 (D.R.I. 2005) (holding that liability insurance underwriters owed
no duty of care to third-party future patrons of nightclub to inspect the premises for purposes of recognizing and remedying
any dangerous or hazardous conditions they might have discovered); ZP No. 54 Ltd. P‘ship v. Fid. & Deposit Co. of
Maryland, 917 So. 2d 368, 375 (Fla. Dist. Ct. App. 2005) (noting that a number of federal and state courts have rejected
notion that surety has duty to third parties growing out of its underwriting activities; holding that because surety owed
no duty of care to property owner with respect to its issuance of performance bonds to a general contractor for work on
owner‘s construction projects, insurer could not liable in tort to property owner).

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Litigation Guide

face when seeking to establish an agency relationship in these cases is whether the surety has
the right to control the conduct of the bail bond company.141
In West v. Sharp Bonding Agency, Inc., the court denied the surety defendant‘s motion for
summary judgment in a wrongful death suit and found that a genuine issue of material fact
existed as to whether an agency relationship existed between the surety and the bail bond
company.142 The plaintiffs brought suit after two bail bondsmen, while attempting to arrest an
individual who failed to appear in court for a municipal traffic ticket, put the individual‘s brother in
a chokehold and killed him.143 The insurer defendant argued it could not be held liable for the
torts the bail agents committed because it exerted no ―
actual control‖ over the bail bondsmen.144
The court rejected the insurer‘s argument because under state law, ―
the right to control, rather
than the actual exertion of control, is sufficient to permit vicarious liability to attach.‖145 The court
ultimately found that a ―
principal-agent relationship was created by a 1998 written contract titled
‗Bail Bond Agent Contract‘‖ in which the surety insurer appointed the bail bond company ―
its
146
agent for the purpose of soliciting and executing bail bonds in Kansas and Missouri.‖
Similarly, in Patino v. Capital Bonding Corporation,147 the court relied on the agreement
between the insurer and the bail bond company in denying the insurer defendant‘s motion for
summary judgment. The action in Patino arose after a bail bond company mistakenly seized
and detained the plaintiff, who had the same last name as an individual who skipped a court
appearance in another state, in a case of mistaken identity.148 The plaintiff‘s claims included
false arrest and imprisonment.149 The defendant insurance company moved for summary
judgment on the theory that it was not vicariously liable for the acts of the bonding company‘s
recovery agents.150 But based on the agreement between the insurer and the bail company, in
which the insurer appointed the bail company as its ―
general agent‖ to solicit bail bonds, an
addendum to the agreement in which the insurer took over management duties of the
bail company, and modifications to the agreement that illustrated a right of control, the court
found that a genuine issue of material fact existed as to whether the defendant insurance
company had the right to control the bail company‘s recovery agents—the key factor in
determining whether the insurance company was vicariously liable for the torts the recovery

141

See, e.g., Patino v. Capital Bonding Corp., 465 F. Supp. 2d 518, 521 (D.S.C. 2006) (―
Under South Carolina law, [t]he test
to determine agency is whether or not the purported principal has the right to control the conduct of his alleged agent.‖)
(citation and internal quotation marks omitted); West v. Sharp Bonding Agency, Inc., 327 S.W.3d 7, 12 (Mo. Ct. App. 2010)
(―G
enerally, all that is required to create an agency relationship is that: (1) the agent holds the power to alter legal relations
between the principal and third parties; (2) the agent is a fiduciary with respect to matters within the scope of agency; and
(3) the principal has the right to control the conduct of the agent with respect to matters entrusted to the agent.‖).
142
West v. Sharp Bonding Agency, Inc., 327 S.W.3d 7 (Mo. Ct. App. 2010). The insurer defendant argued that it could not
be held liable for the torts the bail agents committed because it exerted no ―a
ctual control‖ over the bail bondsmen. Id. at 13.
The court rejected the insurer‘s argument because under state law, ―th
e right to control, rather than the actual exertion of
control, is sufficient to permit vicarious liability to attach.‖ Id.
143
Id. at 10.
144
Id. at 13.
145
Id.
146
Id.
147
Patino v. Capital Bonding Corp., 465 F. Supp. 2d 518 (D.S.C. 2006).
148
Id. at 520–21.
149
Patino sued the bond company, the arresting agents, and the insurance company that sold bonds issued by the bonding
company for false arrest and imprisonment. Id. at 521.
150
Id.

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Litigation Guide

Using Statutes to Establish
Agency Relationship
Advocates may be able to establish an agency
relationship between the surety and bail bond company
through the state insurance code, which may require
bail bond companies to use surety insurers in order to
conduct business. For example, under California law,
bail agent seeking a license must ―
file . . . a notice of
appointment executed by a surety insurer or its
authorized representative authorizing that applicant to
execute undertakings of bail and to solicit and negotiate
those undertakings on its behalf.‖154 The law also
prohibits insurers from ―
execut[ing] an undertaking of
bail except by and through a person holding a bail
license.‖155 Advocates may be able to use laws of this
sort to establish that bail bond agents are agents of the
insurers by the terms of the statute, because the law
allows insurers to act only through bail agents.156
Advocates should be aware, however, that this agency
relationship may not encompass all of the bail agent‘s
conduct. For example, even if a statute creates an
agency relationship that covers matters leading up to
and including the execution of a bail contract, it may not
cover matters subsequent to the execution of that
contract, including the apprehension and surrender of
accused persons.157

agents committed.151 As in West, the court noted
that the plaintiffs only needed to show the right to
control, not actual control, to create a genuine
issue of material fact concerning the existence of
an agency relationship.152
The agency relationship in Patino was
particularly clear cut because the insurance
company not only had appointed the bail
company as its general agent to solicit bail
bonds but also had taken over management
duties for the bail company. In West, the court
reached the same result under the more typical
situation in which the insurer simply appointed
the bail company as its ―
agent‖ to do business in
the state.153 As both courts noted, the surety
insurers and the bail companies need each other
to do business, and fact discovery could prove
the existence of an agency relationship. A
plaintiff is most likely to demonstrate the
existence of an agency relationship—and hold
the insurance company vicariously liable in tort—
by using the contract to point to evidence of a
right to control the conduct of the bail
bond company. 154 155 156 157

2.
Breach of Contract Liability through
Agency Principles

If an agency relationship between the insurer
and the bail bond company can be established, it also may be possible to hold the insurer
accountable based on a breach of contract theory. In Ramos v. International Fidelity Insurance
Company,158 the plaintiffs sued the indemnity insurance company that underwrote the bail
151

Id. at 519–20, 523.
Id. at 523; cf. Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899, 2018 WL 2463210, at *6 (E.D. La. June 1, 2018)
(dismissing false imprisonment and conversion claims premised on an agency theory because plaintiffs failed to allege facts
showing the surety defendants had the right to exercise physical control over the bail bond agent defendants).
153
See, e.g., Edelbrock v. Douglass, No. B142859, 2001 WL 1469076, at *6 (Cal. Ct. App. Nov. 19, 2001); CAL. INS. CODE
§ 1802.1 (requiring bail bond companies to use surety insurers to conduct business).
154
CAL. INS. CODE § 1802.1.
155
Id. § 1800(a).
156
See Groves v. City of Los Angeles, 40 Cal. 2d 751, 756–60 (Cal. 1953). Accord Edelbrock v. Douglass, No. B142859,
2001 WL 1469076, at *6 (Cal. Ct. App. Nov. 19, 2001) (holding based on the same California statute that a bail bondsman
and an insurer were in an ―a
gency relationship created by statute‖).
157
See Edelbrock, 2001 WL 1469076, at *6–7 (―[
a]cts unrelated to solicitation, negotiation, execution and delivery of the bail
bond are not included within the course and scope of the agency created by statute;‖ activities of bail bond agent and
person hired by bail bond agent in apprehending defendants were not controlled by surety company).
158
Ramos v. Int‘l Fid. Ins. Co., 34 N.E. 3d 737 (Mass. App. Ct. 2015).
152

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bond.159 The action arose after the bail bondsman overcharged the plaintiffs the premium on
their bail amount in violation of state law, converted the plaintiffs‘ collateral for his personal use,
and died leaving an insolvent estate.160 It was undisputed that there was a contract creating an
agency relationship between the bail bondsman and the surety.161 The court refused to enter
summary judgment for the insurer on the plaintiff‘s contract claims, noting that, under agency
principles, the insurer was liable for the acts of its agent.162 The court explained that the
plaintiff‘s claims ―
are not in any event claims for fraud, they are claims for breach of contract—
so the question is not one of vicarious liability, but only whether the principal, [the insurer], is
bound by the terms of the contracts entered into by its agent.‖163 Ramos indicates that breach of
contract may be a viable theory for holding surety insurers liable for the conduct of the bail
agents they underwrite.

3. Liability through RICO and Other Theories of Secondary Liability
Advocates should consider the possibility of holding bail bond insurers liable for the wrongful
acts that bail bond agents commit through other theories of secondary liability, including aiding
and abetting, furnishing the means, joint venture, respondent superior, ratification,
and conspiracy.
Two recent class actions have sought to hold the surety liable through conspiracy claims under
the Racketeer Influenced and Corrupt Organizations (―
RICO‖) Act. In one ongoing case,
Mitchell v. First Call Bail and Surety, Inc., the plaintiffs brought claims for assault, trespassing,
false imprisonment, intentional and negligent infliction of emotional distress, and violations of
RICO and the Montana Consumer Protection Act.164 The complaint alleges that the owner of
the bail bond company hired bounty hunters to arrest Eugene Mitchell, who had inadvertently
missed a court hearing. After staking out Mitchell‘s house, a team of six bounty hunters broke
down the front door and entered Mitchell‘s bedroom with guns and rifles drawn. Mitchell, his
wife, and their four-year-old daughter were in bed at the time.165 In support of the ―
enterprise‖
element of the RICO claim,166 the complaint alleges that the bail bond company was acting as
an agent of the surety, and that the bounty hunters were acting as agents of the bail bond
company and subagents of the insurance companies.167 In October 2019, the federal district
court denied a motion to dismiss and allowed the plaintiffs‘ RICO claims against the surety

159

To determine the existence of an agency relationship, the court, similar to the approach taken in Patino and West, looked
at the ―Ag
ency Contract‖ between the bail bond company and the indemnity insurer. The agreement in Ramos authorized
the bail bondsman to act as the insurance company‘s agent for soliciting and writing bail bonds, and the insurance company
also supplied the bail bondsmen with power of attorney. Id. at 739.
160
Id. at 738–40.
161
Id. at 739.
162
Id. at 742.
163
Id. (emphasis added).
164
Complaint, Mitchell v. First Call Bail & Sur., Inc., No. 9:19-cv-00067-DLC (D. Mont. April 17, 2019), ECF No. 1.
165
Mitchell v. First Call Bail & Sur., Inc., 412 F. Supp. 3d 1208, 1214–15 (D. Mont. 2019) (citation and internal quotation
marks omitted).
166
To survive a motion to dismiss a RICO claim, a plaintiff must allege: ―
that the Defendant engaged in ‗(1) conduct (2) of an
enterprise (3) through a pattern (4) of racketeering activity and, additionally, must establish that (5) the defendant caused
injury to plaintiff‘s business or property.‘‖ Id. at 1222 (citation omitted).
167
Complaint ¶¶ 100–31, 135, Mitchell v. First Call Bail and Surety, Inc., No. 9:19-cv-00067-DLC (D. Mont. April 17, 2019),
ECF No. 1.

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defendants to proceed.168 This decision appears to be the first decision in the country to
suggest that it may be possible to hold bail insurance companies liable through RICO.169

III. PRISON RETAIL
Numerous private firms have sprung up in recent years to monetize aspects of everyday life in
prisons and jails. These entities include telecommunications providers, technology companies,
commissary operators, and money transmitters. They make
money by charging incarcerated people and their families for
The prison retail
basic or essential services, like communicating with a son or
daughter, while typically operating in a monopolized
industry now is
environment in which the individual consumers have no
dominated by a handful
choice of alternative or less expensive providers. This feeof conglomerates
based industry (referred to here as ―
prison retail‖) has grown
mostly owned by
in an unplanned, idiosyncratic manner. What started as a
private equity firms.
niche industry occupied by numerous narrowly focused
companies now is dominated by a handful of conglomerates
mostly owned by private equity firms. Although private prison companies tend to receive more
attention from activists and the press, prison retail firms can command aggregate revenue
comparable to the private prison industry.170
Prison retailing is problematic not only because it is built on an inequitable business premise,
but also because industry leaders use specific practices that have been called out as 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 and one-sided contract
terms) are similar to problems commonly confronted by consumers in other settings.
At the outset, advocates should recognize that litigating claims against prison retailers can be
complicated by a variety of unique factors, beginning with incarcerated people‘s lack of access
to even basic transactional information. For example, to the extent that a contract is exclusively
available on the internet, an incarcerated customer without internet access is simply unable to
access the document.171 And even a consumer who has access to the internet and terms on a
168

Mitchell, 412 F. Supp. 3d at 1226. The court also rejected the surety defendants‘ argument that the McCarran-Ferguson
Act reverse preempted the plaintiffs‘ RICO claims. Id. at 1221–22.
169
Advocates should note that a similar case did not achieve a favorable decision on its RICO claims. In Egana v. Blair‟s
Bail Bonds Inc., the plaintiffs‘ RICO claims—which likewise sought to connect the surety to the allegedly unlawful acts of the
bonding company—were initially dismissed without prejudice. Egana v. Blair‘s Bail Bonds Inc., No. CV 17-5899, 2018 WL
2463210, at *2–4 (E.D. La. June 1, 2018) (dismissing RICO claims without prejudice; although plaintiffs sufficiently alleged
an enterprise under RICO, they failed to establish a pattern of racketeering activity or threat of future conduct). The plaintiffs
then repleaded their RICO claims, but the case settled before the court could rule on the repleaded claims, Order of
Dismissal, Egana v. Blair‘s Bail Bonds, Inc., No. 17-5899 (E.D. La. Jan. 23, 2020), ECF No. 397.
170
Peter Wagner & Bernadette Rabuy, Following the Money of Mass Incarceration (Prison Policy Initiative 2017), (―Pri
vate
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.‖).
171
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, Note, Reaching out from behind Bars: The Constitutionality of Laws Barring
Prisoners from the Internet, 67 BROOK. L. REV. 855, 859–66 (2001–02) (surveying laws prohibiting internet access in
correctional facilities).

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kiosk or tablet may well be unable to save, study, or share this text with a friend or advisor due
to lack of email or a printer. Moreover, understanding the vendor‘s terms does not necessarily
allow an incarcerated consumer to avoid unfair terms: in the prison setting, there is rarely a
choice of providers, and as with most consumer contracts, the services are provided on a take-it
or leave it basis with no opportunity to negotiate terms. Prison retail customers also face other
challenges common to many consumers in non-prison settings, such as dense terms written in
impossibly small print.172
This section discusses the practices of prison retailers and the consumer law protections that
may apply.173 In order to understand how consumer law claims may work in the prison retail
context, this section first describes the parties typically involved in prison retail transactions.
Next, it looks at two major types of prison retail transactions in turn—communications and
financial transactions—and provides an overview of how these industries operate in the prison
retail setting.174 It then turns to potential consumer litigation of prison retail abuses. The litigation
section first addresses issues and claims specific to litigation concerning prison
communications, money transfers, and release cards, and then discusses laws that may apply
across the prison retail industry: state Unfair and Deceptive Acts and Practices laws, state laws
provide bases for challenges to site commissions, and antitrust laws.

A. Parties Involved in Prison Retail Transactions
Almost every prison retail transaction is characterized by four, sometimes overlapping, parties:
the end user, the payor, the facility, and the vendor.

1. End Users
The end users of prison retail goods and services are typically people who are incarcerated or
their friends and family, depending on the product or service being sold. For example, 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—one held in the prison or jail and one living on the outside. Similarly, financial
products can be targeted solely at an incarcerated person (release cards to access the person‘s
own funds), or can be used to facilitate a two-party transaction (money transfers from one
person to another).

2. Payors
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, lose their jobs
172

Regan v. Stored Value Cards, No. 14-cv-1187-AT (N.D. Ga. May 29, 2014), ECF No. 27 (directing defendants to file a
reformatted or retyped version of the cardholder agreement in 13-point font).
173
Portions of this section were originally published as Raher, The Company Store and the Literally Captive Market, supra
note 1, at 24–30, 46–53.
174
This guide identifies some consumer laws of general applicability across prison retail but does not attempt to examine all
prison retail practices and applicable consumer protection laws in depth; prison commissaries, for example, are not a core
focus here.

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when arrested or incarcerated, and, to the extent they can earn anything for work performed
while incarcerated, earn wages shockingly far below the minimum wage.175 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 of electronic payments has made it
increasingly feasible to collect money (even in small amounts) from non-incarcerated payors
(for the sake of simplicity, this group of non-incarcerated individuals is referred to here as
family, even though such payors can also be friends, attorneys, members of faith, community,
or other support groups, or anyone who wants to communicate with an incarcerated individual).
Payors can make direct or indirect payments. Direct payments can take several forms. In the
case of telecommunications, a family member can be a party to the transaction being
purchased—for example, as the recipient of a collect call. Families also can purchase some
tangible goods through prison commissaries for someone else who is incarcerated, although
these purchases sometimes are limited to bundled ―
care packages.‖176 Additionally, families
may pay for specific services by sending an advance payment that the vendor holds.
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‖ (for more
on inmate trust accounts, see page 40). Once the money is in the trust account, the recipient
usually can use it for any purpose not prohibited by prison regulations. Assuming that the
transferor trusts the recipient to manage their 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.

3. Facilities
Correctional facilities play two significant roles in prison retailing. First, 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 or services in the facility.
Second, the facility may receive compensation under the contract with the vendor, thus making
the correctional agency financially interested in prison retail revenues. 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 prison retail sector often attempt to justify vendors‘ monopolist privileges by
arguing that prices are subject to market competition when facilities solicit and evaluate bids.177
This theory is becoming increasingly dubious in light of industry consolidation. Nevertheless, it
175

Wendy Sawyer, How much do incarcerated people earn in each state?, PRISON POL‘Y INITIATIVE BLOG (Apr. 10, 2017),
(national survey finding hourly wages of 14¢ to $1.41 for incarcerated workers).
176
Taylor Elizabeth Eldridge, The Big Business of Prisoner Care Packages: Inside the Booming Market for Food in
Pouches, PRISON LEGAL NEWS, at 29–30 (Oct. 2018) (profiling major sellers of prison care packages).
177
GTL, Securus, and CenturyLink all made this argument in the FCC‘s 2013 rulemaking. See Reply Comments of Stephen
A. Raher, In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, at 5 n.21 (Apr. 22, 2013),
(collecting citations).

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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.
As facilities explore new ways to profit from prison retailing, the number and type of potential
conflicts-of-interest and forced monopolies have dramatically increased. For example, when
facilities receive commissions from an electronic messaging system,178 they may boost
commission revenue by either banning postal mail179 or implementing policies that make mail
cumbersome and impractical.180 Or if a facility receives a commission from a tablet-based ebook program, it might prohibit books from being sent to incarcerated people through the
mail.181 These practices not only drive up expenditures for incarcerated people and their
families, but also cut off valuable ways people connect and grow. They likely will become more
pronounced as the prevalence of prison retailing grows.

4. 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 now have largely been absorbed by and
Government agencies
consolidated into large conglomerates that mostly are owned
wishing to contract for
by prominent private equity firms.182 These increasingly
services typically have
powerful companies continue to grow by expanding the range
little choice in deciding
of corrections services they seek to provide, often selling a
which company to
variety of products pursuant to bundled contracts with facilities.
award contracts.
As a result of this industry consolidation, government agencies
wishing to contract for services typically have little choice in
deciding which company to award contracts. In turn, this lack of competition in the industry can
facilitate high consumer prices and abusive behavior.183

178

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), (discussing common commission structures).
179
Jails in at least thirteen states have banned all incoming mail except for postcards. See PRISON POL‘Y INITIATIVE,
PROTECTING LETTERS FROM HOME.
180
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 POST-GAZETTE (Oct. 17,
2018), (new policy of scanning and reprinting incoming mail, based on allegations of drug smuggling, results in ―
missing
pages, misdirected letters, weeks long delays, and copies so poor as to be illegible‖); Katie Meyer, Pennsylvania Prison
Officials Change Mail Handling after Drug-Related Illnesses, NATIONAL PUBLIC RADIO (Sep. 5, 2018), (discussing
questionable evidence of drug-smuggling through the mail); Charlotte County Jail Introduces Inmates to New
Communication Tablets, WINK (Dec. 4, 2017), (incoming mail to be scanned and distributed electronically on tablets).
181
Samantha Melamed, One Review of Pa. Prisons‟ Pricey Ebooks: „Books That Are Available For Free, That Nobody
Wants Anyway,‟ PHILA. INQUIRER (Sept. 21, 2018). 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. AGR346, appx. D (Cost Matrix, revised Dec. 14, 2012) (on file with authors).
182
As a rough indicator of company 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 authors) (one of several identical disclosures filed with state public
utility commissions concerning the Securus acquisition).
183
For more on corporate consolidation, see HIGHSMITH, COMMERCIALIZED (IN)JUSTICE, supra note 1, at 16–17.

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B. Prison Communications: Overview and Regulation
1. Overview of Prison Communications and the Inmate Calling Services Industry
Incarcerated people typically have had three options for communication: letters, in-person
visitation, and telephone calls.184 This guide focuses on telephone calls as well as newer forms
of electronic communications. Until relatively recently, telephone rates were set by state and
federal agencies who oversaw the highly regulated industry dominated by the Bell System and
smaller independent operators.185 Phone pricing changed
gradually but dramatically following the break-up of the Bell
Today the inmate calling
System and the subsequent passage of the
services industry is
Telecommunications Act of 1996, which led to a
dominated by two
proliferation of new companies in the so-called ―
inmate
companies: Securus
calling services‖ (―
ICS‖) industry, attracted by the
Technologies and
prospects of high call volumes and unchecked rates.186
Global Tel*Link.
Today the 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
Technologies and Global Tel*Link (―
GTL‖)—collectively have absorbed dozens of competitors
since the 1990s.187 In 2013, the FCC determined that Securus, GTL, and a third company,
Telmate, controlled 85% of the ICS telephone market (measured by revenue).188 In 2017, GTL
acquired Telmate.189
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, video
calling technology (sometimes misnomered by the industry as ―
video visitation‖) and electronic
190
messaging are the latest newcomers. Specialized computer tablets that provide
communications, education, and entertainment functions, typically operating on a closed
wireless network (but never with internet connectivity191) also are gaining traction in the prison
retail market.192

184

Stephen Raher, Phoning Home: Prison Telecommunications in a Deregulatory Age, in 2 PRISON PRIVATIZATION: THE MANY
FACETS OF A CONTROVERSIAL INDUSTRY 215, 219–20 (Byron E. Price & John C. Morris, eds., 2012).
185
Id. at 217–18.
186
Id. at 218; see also Zachary Fuchs, Behind Bars: The Urgency and Simplicity of Prison Phone Reform, 14 HARV. L. &
POL‘Y REV. 205, 208–11 (2019) (discussing the origins and structure of the ICS industry).
187
Peter Wagner & Alexi Jones, State of Phone Justice, PRISON POL‘Y INITIATIVE (Feb. 2019), (text and graphic
accompanying notes 20 and 21).
188
Second Report and Order and Third Further Notice of Proposed Rulemaking [hereinafter ―Se
cond Report & Order‖], In
the Matter of Rates for Interstate Inmate Calling Services, ¶ 76, 30 FCC Rcd. at 12801 (2015) (No. 12-375).
189
Peter Wagner, Prison Phone Giant GTL Gets Bigger, Again, PRISON POL‘Y INITIATIVE BLOG (Aug. 28, 2017).
190
―El
ectronic messaging‖ refers to text-based electronic messages that incarcerated people can exchange with family
members. This product is roughly akin to email, but is different in many critical respects. See Raher, You‟ve Got Mail, supra
note 178.
191
See generally Holtz, supra note 171, at 859–66 (surveying laws prohibiting internet access in correctional facilities).
192
It is worth noting that, once the FCC signaled its intent to regulate calling rates in 2013, ICS carriers focused on
identifying new unregulated sources of revenue, including these computer tablets. Raher, The Company Store and the
Literally Captive Market, supra note 1, at 26.

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Some programs provide tablets to users for free, but then make their money by making most
features and content only accessible for a fee.193 Such fees tend to greatly exceed free-world
prices, though there is no obvious cost-based reason for such pricing.194 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.195
Tablets illustrate the wellspring of potential conflicts of interest in the prison retail industry and
the ways in which prison telecommunications practices may exploit captive customers. When a
facility stands to profit financially from tablet usage, operational policies can be crafted to
increase revenue at the expense of incarcerated people and their families: in-person visits may
be prohibited to push video calling;196 prison libraries or donated books can be cut off and
replaced with e-books for purchase;197 postal mail can be restricted in order to increase
electronic messaging usage;198 and educational programs can be curtailed to redirect students
to online-only courses.199

2. Brief History of Prison Communications Regulation
To help contextualize the strategies available to advocates, this section highlights some of the
key moments in the long and complicated history of the regulation (and deregulation) of inmate
calling services (―
ICS‖) rates.200
In 2000, incarcerated people and their families filed the landmark Wright class-action lawsuit,
which formed the spark for two decades of regulatory reform in the ICS sector.201 The Wright
plaintiffs argued that disproportionately high calling rates violated the federal Communication
Act‘s requirement that common carriers‘ ―
charges, practices, classifications, and regulation‖ be
202
―
just and reasonable.‖ The federal district court ultimately referred the case to the Federal
Communications Commission (―
FCC‖) under the doctrine of primary jurisdiction, citing two
statutory grants of jurisdiction that allowed the FCC to address the plaintiffs‘ concerns. First, the
193

See generally Wanda Bertram & Peter Wagner, How to spot the hidden costs in a „no-cost‟ tablet contract, PRISON POL‘Y
INITIATIVE BLOG (Jul. 24, 2018).
194
Perhaps the most infamous example of an abusive pricing structure occurred when the West Virginia state prison system
introduced a computer tablet program that charged users a per-minute fee to read e-books. See West Virginia Inmates
Charged for Reading „Free‟ Books on Tablets, THE CRIME REPORT (Nov. 25, 2019).
195
Tablet pricing varies widely by facility and vendor. See Raher, The Company Store and the Literally Captive Market,
supra note 1, at 21 n.75 (discussing examples of tablet pricing).
196
Matt Lakin, Point, Click, But No Touch: Debate Shapes up over Video Visitation at Knox Jail, KNOXVILLE NEWS SENTINEL
(Nov. 24, 2018), (county jail received $79,000 over four years in commissions from video visitation after prohibiting inperson visits); Steve Horn & Iris Wagner, Washington State: Jail Phone Rates Increase as Video Replaces In-person Visits,
PRISON LEGAL NEWS, at 1 (Oct. 2018).
197
See Raher, The Company Store and the Literally Captive Market, supra note 1, at 28–29 (discussing inflated prices for
electronic books and music); 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).
198
See supra notes 179–180. Raher, The Company Store and the Literally Captive Market, supra note 1, at 28 (discussing
―p
remium‖ add-ons, including ―
stamps‖ to send text-only e-message).
199
Although the authors 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., RAND CORP. CORRECTIONAL EDUCATION IN THE UNITED STATES: HOW EFFECTIVE IS IT, AND HOW CAN W E MOVE
THE FIELD FORWARD 3 (2014).
200
For a fuller discussion of this history, see Raher, The Company Store and the Literally Captive Market, supra note 1, at
24–30, 46–53; Fuchs, supra note 186, at 213–22; Ting v. AT&T, 319 F.3d 1126, 1130–34 (9th Cir. 2003).
201
Class Action Complaint, Wright v. Corr. Corp. of Am., Case No. 00-cv-293-GK (D.D.C. Feb. 16, 2000), ECF No. 1.
202
47 U.S.C. § 201(b).

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court pointed to the just-and-reasonable rates language in § 201(b).203 Second, the court cited
§ 276,204 which directs the FCC to ensure competition and fair compensation in the payphone
industry while also classifying all ―
inmate telephone service‖ as payphone service.205
After the district court‘s ruling, the FCC waited almost ten years to commence a rulemaking
proceeding. In 2015, the FCC issued its final ICS rules. It relied on both § 201 and § 276 for
jurisdiction.206 The final rule imposed rate caps on all ICS calls (both inter- and intrastate) and
strictly limited ancillary fees.207 Significantly, the FCC reaffirmed its earlier finding that, for
purposes or regulatory accounting, site commissions were not a legitimate cost of providing
communications services.208 Two commissioners dissented from the final rule, including thenCommissioner (now Chairman) Ajit Pai.
Acting on a challenge brought by the ICS industry, a split panel of the D.C. Circuit vacated
several parts of the FCC‘s 2015 rules.209 The court held that the FCC lacked preemptive power
to regulate intrastate rates, and therefore vacated the rate caps and limits on ancillary fees, as
applied to intrastate calls.210 It also vacated the portion of the FCC‘s order categorically
excluding site commissions from the calculus used to set ICS rate caps, disagreeing with the
FCC‘s conclusion that site commissions have nothing to do with the provision of ICS.211
Although the court was hostile to the FCC‘s regulation of intrastate matters, the majority echoed
one of the more surprising aspects of then-Commissioner Pai‘s dissent, finding that the limits on
ancillary fees associated with interstate calls were a proper exercise of the FCC‘s powers under
§ 201.212 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.213 As for the caps on per-minute interstate rates, the court
acknowledged the FCC‘s jurisdiction to impose rate caps, but invalided the rate caps in the final
rule based on flawed methodology.214
The entire D.C. Circuit panel joined the portion of the holding vacating the FCC‘s rule requiring
annual reporting of ICS carriers‘ revenues and costs related to video calling services. The court
203

Memorandum Opinion at 6–7, Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Aug. 22, 2001), ECF No. 94
(citing 47 U.S.C. § 201(b)).
204
47 U.S.C. § 276. This provision, the ―p
ayphone provision,‖ was added in 1996, when the Communications Act of 1934
was amended by the Telecommunications Act of 1996.
205
Memorandum Opinion at 8, Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Aug. 22, 2001), ECF No. 94.
206
Second Report & Order, In the Matter of Rates for Interstate Inmate Calling Services at ¶ 3, n.12 and accompanying text,
30 FCC Rcd. at 12766.
207
Id. ¶ 9, 30 FCC Rcd. at 12769.
208
Id. ¶ 118, 30 FCC Rcd. at 12819.
209
Global Tel*Link v. Fed. Commc‘ns Comm‘n, 866 F.3d 397 (D.C. Cir. 2017).
210
Id. at 402.
211
Id. at 412–14.
212
Id. at 415 (―Co
ntrary 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.‖) (emphasis in original).
213
Id. at 415 (upholding FCC‘s jurisdiction to limit ancillary fees for interstate calls, but remanding because ―w
e 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. Jun. 29, 2018) (discussing methodological difficulties
of allocating fees between inter- and intrastate calls).
214
Global Tel*Link, 866 F.3d at 414–15.

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noted that the FCC had not proven it had jurisdiction because the record did not show that
video calling was a ―
communication by wire or radio.‖215
The FCC has been slow to issue new rules in the wake of the D.C. Circuit‘s ruling in Wright.
Wright still appears to be stayed (though administratively closed) pending further rulemaking,
with the parties disagreeing on whether there is an ongoing role for the district court.216 As for
calling rates, the D.C. Circuit 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 a 2013 interim order
from the FCC, and intrastate rates are subject only to regulation by states.217
In the meantime, ICS carriers have sought to escape state intrastate regulation in some
jurisdictions by citing their use of VoIP technology, which some states have completely
deregulated. This leads to the possibility of wholly unregulated intrastate rates, which is of
particular concern given that the vast majority of people who are incarcerated are in state
prisons and local jails 218 and are likely to make many intrastate calls.

C. Financial Transactions: Overview
1. Overview of Correctional Banking
Incarcerated people largely rely on family members for the funds necessary to purchase goods
and services on the inside. This structure has led to the proliferation of companies, including
correctional banking vendors, which profit from facilitating such transfers.

The job of a
correctional banking
vendor is simple:
receive deposits and
facilitate payments on
behalf of a customer
population that is not
allowed to use cash,
checks, or
payment cards.

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 that is
not allowed to use cash, checks, or payment cards. As a nonbank entity that uses technology to facilitate payments by or for
the benefit of incarcerated people, correctional banking vendors
are a niche type of financial technology (or ―
fintech‖) firm.219

215

Id. at 415.
See Joint Status Report, Wright v. Corr. Corp. of Am., No. 00-293 (D.D.C., Dec. 28, 2018), ECF No. 216.
217
The 2013 order capped interstate rates at 21¢ per minute for prepaid calls and 25¢ for collect calls, and also created
―s
afe harbor‖ rates of 12¢ and 14¢ (for prepaid and collect calls, respectively), which are presumed to be reasonable.
Report and Order and Further Notice of Proposed Rulemaking [hereinafter ―F
irst Report & Order‖] at ¶¶ 60, 73, In the Matter
of Rates for Interstate Inmate Calling Services, 28 FCC Rcd. at 14140, 14147 (2013) (No. 12-375).
218
Wendy Sawyer & Peter Wagner, Mass Incarceration: The Whole Pie 2020, PRISON POL‘Y INITIATIVE (March 24, 2020).
219
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), archived (defining a fintech as a nonbank financial
service company that uses ―
some sort of digital technology to provide financial services to consumers‖).
216

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Answering the question of whether incarcerated people are entitled to interest earned on trust
accounts balances—one of the few issues in the correctional banking sector to have received
extensive judicial attention—provides an informative illustration of current correctional banking
trends. Four federal circuit courts of appeals have addressed this question,220 with only one
court holding that the beneficiary has a property right to earned interest.221 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 state Department of Corrections ―
decided to outsource management of
a wide swath of back-room systems.‖222 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.223 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 private vendor and people
who were incarcerated paid the price.224 This fact pattern is echoed in many correctional
banking contracts, which seem to prioritize bureaucratic convenience and government and
private revenue considerations over the best interests of the incarcerated accountholders.

2. Overview of Types of Money Transfers
The money transfers facilitated by correctional banking vendors come in a few varieties:
transfers to inmate trust accounts, direct payments for goods or services, and release cards.
i.

Inmate Trust Accounts

―
Inmate trust account‖ is a term of art (specific terminology varies by jurisdiction) that describes
a pooled deposit account held by a governmental entity for the benefit of multiple incarcerated
people, each of whom holds equitable title to a subaccount containing their funds.225
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 their release from custody. Now, many
220

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, 218 n.44 (2013) (discussing
circuit split)
221
Schneider v. Cal. Dep‘t of Corr., 151 F.3d 1194 (9th Cir. 1998).
222
Young v. Wall, 642 F.3d 49, 52 (1st Cir. 2011).
223
Id.
224
Joint Stmt. of Facts, Young v. Wall, No. 03-220S (D.R.I. Sept. 9, 2005), ECF No. 71.
225
See e.g., CAL. PENAL CODE § 5008 (Dept. of Corrections and Rehabilitation Secretary ―s
hall deposit any funds of inmates
in his or her possession in trust with the Treasurer‖); TEX. GOV‘T CODE ANN. § 501.014 (―T
he 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).

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agencies wish to outsource the management of such accounts, often bundling the
straightforward tasks of trust fund accounting with other ―
correctional banking‖ services that
private companies load up with user fees. In addition to high fees, inmate trust accounts may be
subject to mandatory deductions to cover fines, victim restitution, or costs of confinement.226
Traditionally, a family member would deposit funds to a
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 entities that issue money orders and that
operate in a competitive market.227 Contractors that hold
correctional banking contracts tend to steer transferors
away from low-cost money orders, in favor of an array of
electronic or in-person payments that allow the contractor
to extract high fees.228

In addition to high fees,
inmate trust accounts may
be subject to mandatory
deductions to cover fines,
victim restitution, or costs
of confinement.

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 to 35% for smaller
deposits. When a plaintiff incarcerated in Kansas challenged deposit fees, the state‘s supreme
court noted that the plaintiff‘s mother incurred monthly fees of $11.40 to deposit $45 into his
trust account—effectively a 25% fee.229
ii.

Direct Payments to Vendors

Prison retail vendors also collect direct payments, which can come either from an inmate trust
account or a family member. 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.

226

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
(Nov. 2018) (discussing Pennsylvania law); OR. REV. STAT. § 423.105 (mandatory deductions of 10-15% from all trust
account deposits); COLO. REV. STAT. § 16-18.5-106 (mandatory deductions of at least 20% from all trust account deposits).
227
See U.S. POSTAL SERV., OFC. OF INSPECTOR GENERAL, No. RARC-WP-16-007, MODERNIZING THE POSTAL MONEY ORDER, at
8–10 (2016) (summarizing the market of money-order issuers).
228
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 ―P
CI Security Standards Council,
Requirements and Security Assessment Procedures,‖ ver. 3.2.1 (May 2018). In contrast, ACH security requirements are
more focused on identity verification and fraud detection.
229
Matson v. Kan. Dep‘t of Corr., 346 P.3d 327, 331–32 (Kan. 2015).

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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
misleadingly to such prepaid amounts as creating an ―
account.‖ Prepayments held by vendors
are simply unsecured contractual obligations of the vendor, and should not be analogized to
deposit accounts.230 Making matters even more confusing for consumers, many correctional
banking vendors collect trust account deposits and retail-transaction prepayments, which can
cause some consumers to confuse the two types of transactions.
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.231 Merchant insolvency is a particular risk in the prison industry because
such 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 hold (likely worthless)
unsecured claims.232
Pernicious forfeiture provisions also can result in substantial unfairness to customers.
Customers may find that their prepaid funds are silently depleted through ―
service‖ or inactivity
fees. And forfeiture provisions may not provide for refunds of prepaid amounts upon an
incarcerated customer‘s release from custody or upon a government contract change that
removes the vendor from the prison facility. Some vendors have even advertised prepaid
products to correction agencies as a way to avoid unclaimed property laws.233 These provisions
are entirely a creature of private contract and could easily be prohibited through the terms of the
vendor-facility contract. Thus far, however, few facilities have shown any interest in protecting
consumers by ending such confiscatory practices.
Even though prepayments are often disadvantageous to incarcerated consumers, they remain
common for a few reasons. 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.
iii.

Release Cards

The final financial transaction associated with a term of incarceration comes when a facility
owes money to a person upon their release. Typically, this money consists of the final balance
230

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.‖).
231
Norman I. Silber & Steven Stites, Merchant Authorized Consumer Cash Substitutes, Hofstra Payments Processing
Roundtable, at 3 (Mar. 14, 2018), (describing merchant insolvency and the absence of standard terms as ―
universal
problems‖).
232
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 32 (Dec. 2016).
233
See Comments of Stephen Raher, Prison Pol‘y Initiative at 5 n.22, Proposed Amendments to Regulation E: Curb
exploitation of people released from custody, Dkt. No. CFPB-2014-0031 (Mar. 18, 2015).

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of an inmate trust account, although in the case of jails, it could simply be a refund of money
that the individual 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. More
specifically, it is an open loop prepaid debit card (typically branded as a MasterCard). Under
most release-card contracts, the correctional agency pays nothing and the card issuer makes
money by charging cardholders a panoply of exorbitant fees.234 Making matters worse, most
facilities that use release cards do not give people an option to receive release payments
through a different method.

D. Consumer Litigation Regarding Prison Retail Transactions
Consumer litigation presents one strategy for combatting abuses in the prison retail industry
and securing relief for victims of financial exploitation. This section discusses examples of
consumer litigation that has been brought to challenge prison retail abuses. Because litigation
in this area is still in nascent stages, this section identifies the core laws that regulate the
industry as well as potential consumer claims that may be available. The first three sections
focus on unique considerations for litigation concerning three specific prison retail areas—
communications, payments and money transfers, and release cards. The final section
discusses the potential use of state Unfair and Deceptive Acts and Practices (―
UDAP‖) laws,
state laws relevant to site commissions, and antitrust laws to challenge exploitative practices
across the prison retail industry.

1. Litigation Concerning Communications
Title II of the Communications Act235 requires ―
just and reasonable‖ rates, and provides
consumer with a private cause of action to sue for violations.236 This section focuses on
overcoming threshold barriers to exercising this private right of action and discusses recent
consumer actions challenging ICS rates under the Communications Act as well as under state
law. In addition to considering claims similar to those in the lawsuits described below,
advocates should consider whether ICS rates are regulated by state law in their jurisdiction, and
if so, whether such laws provide another hook for litigation (see side bar on page 45).
A primary barrier for consumers to overcome in challenging ICS rates under the
Communications Act is that many courts (including, most obviously, the district court that heard
the Wright case; see page 37237) have invoked the doctrine of primary jurisdiction and referred
rate challenges to the FCC.238 While this doctrine does not necessarily end a legal challenge, it
can result in decades of delay, as the Wright Petitioners can attest. Yet the longer the FCC
234

Id. at 1, 3–5.
―T
itle II‖ refers to the provisions of the Communications Act that govern common carriers (currently codified at 47 U.S.C.
§§ 201–76). The most relevant prevision of title II for purposes of this discussion is the just and reasonable rate provision in
§ 201. In 2013, the FCC held that ICS providers are common carriers under title II. First Report & Order, supra note 217,
¶ 13.
236
47 U.S.C. §§ 201(a), 207; see also Global Crossing Telecommc‘ns, Inc. v. Metrophones Telecommc‘ns, Inc., 550 U.S.
45, 53–54 (2007) (explaining private cause of action).
237
See supra notes 203–205 and accompanying text.
238
Madeleine Severin, Is There a Winning Argument against Excessive Rates for Collect Calls from Prisoners? 25 CARDOZO
L. REV. 1469, 1490–94 (2004).
235

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postpones action following the D.C. Circuit‘s 2017 decision in
The longer the FCC
Global Tel*Link v. FCC, the stronger the argument plaintiffs
have for bringing a private lawsuit. The doctrine of primary
postpones action
jurisdiction is a prudential rule that some courts have declined
following the D.C.
to apply in situations where ―
the agency is aware of but has
Circuit’s 2017 decision
expressed
no
interest
in
the
subject
matter of the litigation.‖239
in Global Tel*Link v.
Thirty months after the D.C. Circuit decided the Global
FCC, the stronger the
Tel*Link case, the FCC finally took some action to address
argument plaintiffs
the issues left unresolved after the ruling. Thus far, however,
have for bringing a
it only has taken up the very narrow issue of ancillary fees.240
private lawsuit.
As the FCC delays addressing the other issues, advocates
may argue that this inaction demonstrates that the agency
has failed to express interest in the subject matter of the litigation, and thus that the court
should decline to refer the issue to the FCC under the doctrine of primary jurisdiction.
A second barrier consumers may face is the filed-rate doctrine. Arguments that this doctrine
should not apply in this context are discussed beginning on page 66.
Courts have certified at least a few class actions regarding ICS rates in recent years. In 2017, a
federal district court in Arkansas certified two class actions challenging the legality of site
commissions under title II and alleging common law unjust enrichment against Securus and
GTL.241 However, after the D.C. Circuit vacated the FCC‘s attempts to rein in site commissions,
the court decertified both classes and dismissed the named plaintiffs‘ claims.242 In April 2020,
the Eighth Circuit affirmed the district court‘s class decertification order and dismissal of the
plaintiffs‘ individual claims.243
A similar suit in New Jersey has fared better. Filed in 2013, the plaintiffs challenged ICS rates
under title II, as well as 42 U.S.C. § 1983, the New Jersey Consumer Fraud Act (―
CFA‖), and a
244
common law unjust enrichment claim. The plaintiffs ultimately chose to seek class
certification on only two of their claims: violation of the CFA and violations of the Fifth
Amendment Takings Clause (actionable under § 1983). The court denied the parties‘ motions
for summary judgment245 and certified both claims over GTL‘s objections in August 2018.246 In
March 2020, the court ruled in favor of GTL on the takings claim, but allowed the CFA claim to

239

Astiana v. Hain Celestial Group, 783 F.3d 753, 761 (9th Cir. 2015).
See Public Notice: Wireline Competition Bureau Seeks to Refresh the Record on Ancillary Service Charges Related to
Inmate Calling Service (WC Dkt. No. 12-375) (Feb. 4, 2020).
241
In re Global Tel*Link Corp. ICS Litigation, No. 14-cv-5275, 2017 WL 471571 (W.D. Ark. Feb. 3, 2017).
242
Mojica v. Securus Tech., No. 14-cv-5258, 2018 WL 3212037 (W.D. Ark. Jun. 29, 2018).
243
Stuart v. Glob. Tel*Link Corp., 2020 WL 1870473, at *1 (8th Cir. Apr. 15, 2020).
244
Complaint, James et al. v. Global Tel*Link Corp., et al., No. 13-cv-4989 (D.N.J. Aug. 20, 2013), ECF No. 1.
245
James v. Global Tel*Link Corp., No. 13-cv-4989, 2018 WL 3736478, at *1 (D.N.J. Aug. 6, 2018).
246
James v. Global Tel*Link Corp., No. 13-cv-4989, 2018 WL 3727371, at *12 (D.N.J. Aug. 6, 2018). 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.
240

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proceed to trial.247 Subsequently, the parties reached an agreement, and in May 2020, the class
asked the court for preliminary approval of the settlement. While the New Jersey case is
arguably the most successful ICS litigation since the Wright lawsuit, it is entirely retrospective—
in 2016, three years after the case was filed, the New Jersey legislature prohibited site
commissions, cracked down on ancillary fees, and capped call rates at 11¢ per minute.248
Accordingly, the class action only concerns rates charged prior to the 2016 legislative reform.
Another ongoing class action, Pearson v. Hodgson (also discussed on page 58), alleges that
the county jail‘s phone contract with Securus constitutes an illegal kickback scheme in violation
of Massachusetts law. In 2018, the federal district court denied Securus‘s attempt to dismiss the
claims under the Massachusetts consumer protection statute, 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.249

Non-Litigation Strategies for Reform of Prison Communications Rates
Although this guide is dedicated to exploring potential litigation strategies, litigation often works best as a complement to other
reform strategies. Highlighted below are legislative, regulatory, and administrative avenues for reform at the state, local, and
federal levels that have been responsible for many recent victories in obtaining relief from excessive communications rates.
Local Contracting for Rates
At the local level, counties may be able to negotiate contracts with more favorable communications rates for
250
local jails.
State Regulation of Rates
States have addressed unfair ICS rates in a variety of ways, including:
251
 Imposing statutory ICS rate caps;
 Granting public utility commissions the power to police ICS rates, typically under the umbrella of regulating operator
252
services;
 Legislating more general mandates, such as directing correctional facilities to bring ICS rates in line with non-prison
253
phone service rates;
254
 Eliminating site commissions in an effort to bring down costs.
Federal Regulation of Rates
On the federal level, the scope of further regulation will depend on whether Congress acts to clarify and bolster the FCC‘s
jurisdiction over intrastate ICS rates and newer communications technologies. Legislative reform efforts are ongoing with bills
255
to strengthen the FCC‘s authority over prison communications.
If Congress does not act, the FCC still can regulate interstate rates, including non-telephone communications services (with
the demonstration that the communication falls within FCC jurisdiction), though challenges to any such regulation are likely
given the failure of federal law to keep pace with technology. Nonetheless, the FCC has two potential paths it can take to
protect consumers from unreasonable charges for video calling and other newer communications technologies. First, § 1302
of the Telecommunications Act expressly directs the FCC to ―e
ncourage the deployment on a reasonable and timely basis of
advanced 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
256
to infrastructure investment.‖ There are strong arguments that grant the FCC statutory authority to impose price caps on
257
new ICS technologies like video calling and electronic messaging. Second, advanced technologies also are susceptible to
258
regulation as a telecommunications service under title II of the Communications Act.
247

James v. Global Tel*Link Corp., No. 13-cv-4989, 2020 WL 998858, at *2–5 (D.N.J. Mar. 2, 2020) (granting motion for
judgment on the pleadings as to takings claim, but denying motion as to CFA claim).
248
N.J. STAT. § 30:4-8.12.
249
Pearson v. Hodgson, 363 F. Supp. 3d 197, 207–08 (D. Mass. 2018).

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2. Litigation Concerning Contemporaneous Payments and Money Transfers

250 251 252 253 254 255 256 257 258

Advocates developing litigation concerning contemporaneous payments and money transfers in
the prison context should consider the applicability and helpfulness of several financial account
and money transaction laws, including the common law of trusts, the Electronic Fund Transfer
Act (―
EFTA‖),259 state money-transmitter statutes, and the Gramm-Leach-Bliley Act (―
GLBA‖).260
To the extent that 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 often are governed by generally applicable trust law.261 If the general
law of trusts applies, beneficiaries may be able to challenge transaction fees to the extent the

250

See, e.g., Dallas Morning News Editorial, By lowering inmate calling rates, Dallas County put principle over profit, DALLAS
MORNING NEWS (Feb. 20, 2020), (discussing new phone contract in county jail, featuring calling rates of just over 1¢ per
minute); Karen Matthews, NYC Makes Calls from Jail Free, 1st Major US City to Do So, U.S. NEWS (May 1, 2019),
(allowance of 21 minutes of free calling time every three hours).
251
See, e.g., N.J. STAT. 30:4-8.12 (11¢ per minute rate caps); 730 ILL. COMP. STAT. 5/3-4-1(a-5) (7¢ per minute rate caps).
252
In re Inquiry into Regulatory Requirements for Alternative Operator Services Companies, Iowa Utilities Board, Dkt. No.
NOI-2019-0001 (examining ICS rates under Iowa Code § 476.91, which governs operator services); see also Colo. House
Bill 20-1267 (legislation to restore the Colorado Public Utility Commission‘s jurisdiction over ICS carriers as part of the nonoptional operator services regulatory statute; legislation passed the House on March 10, 2020, and was introduced in the
Senate and assigned to the Judiciary Committee the following day).
253
See, e.g., 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‖).
254
See, e.g., S.C. CODE § 10-1-210 (―T
he 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 ―ra
tes and surcharges that are commensurate with those
charged to the general public for like services,‖ and foregoing commissions from ICS revenue); see also Fuchs, supra note
186, at 226.
255
See, e.g., Martha Wright-Reed Just and Reasonable Communications Act of 2019, S.1764, 116th Cong. (2019–2020);
Martha Wright Prison Phone Justice Act, H.R. 6389, 116th Cong. (2019–2020); Video Visitation and Inmate Calling in
Prisons Act of 2017, S. 1614, 115th Cong. (2017).
256
47 U.S.C. § 1302(a).
257
See Raher, The Company Store and the Literally Captive Market, supra note 1, at 51–52.
258
See id. at 52–53.
259
15 U.S.C. § 1693 et seq.
260
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).
261
E.g., Matson v. Kansas. Dep‘t of Corr., 346 P.3d 327, 330 (Kan. 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, 1101–02 (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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fees are not commercially reasonable.262 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.263 In addition, if a
correctional agency acts as trustee of an inmate trust and receives commissions from a thirdparty administrator, then the agency may be vulnerable to a charge of breaching its duty
of loyalty.264
The EFTA, as implemented by Regulation E,265 likely applies to many transfers of money by
family members, particularly debit-card payments,266 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.‖267 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,268 instead favoring disclosure of 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.269 These laws vary greatly by state.270
The Uniform Money Services Act (adopted by 11 states and the Virgin Islands271) covers
businesses that ―
receiv[e] money or monetary value for transmission,‖272 but does not apply to a

262

E.g., Upp v. Mellon Bank, N.A., 799 F. Supp. 540, 544–45 (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).
263
See e.g., E. Armata, Inc. v. Korea Commercial Bank, 367 F.3d 123, 133–34 (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 ―m
aintaining 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‖ (citation and internal quotation marks
omitted)).
264
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.‖).
265
12 C.F.R. pt. 1005.
266
Id. § 1005.3(b)(1)(v).
267
Id. § 1005.2(b)(3) (Regulation E‘s definition of ―a
ccount‖ excludes ―a
n 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 (―T
he 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.‖).
268
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
―re
loadable and not marketed or labeled as a gift card or gift certificate.‖ 15 U.S.C. § 1693l-1(a)(2)(D). Nor does this
provision appear to apply to release cards. See Humphrey v. Stored Value Cards, 355 F. Supp. 3d 638, 643-644 (N.D. Ohio
2019) (holding that release cards are not general-use prepaid cards because they are not ―
marketed to the general public‖).
269
But see Comments of Stephen Raher, Prison Pol‘y Initiative, supra note 233, at 11 n.54 and accompanying text
(discussing JPay‘s unverified allegation that ―f
ew‖ correctional money services business comply with applicable state
regulations).
270
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, 218 n.44 (2013).
271
Unif. Money Servs. Act, UNIF. L. COMM‘N.
272
Unif. Money Servs. Act § 102(14) (2004).

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merchant that collects prepayments for future transactions.273 While the Uniform Money
Services Act exempts state and local governments from its coverage, there is no exemption for
an agent of a government274—a feature that should be retained if advocates ever call for a
federal money transmitter license.275
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.276 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.277 As covered entities that are not overseen by
a bank regulator, correctional banking vendors are covered by the GLBA implementing
regulations issued by the Federal Trade Commission (―
FTC‖).278 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.279 Covered entities are required to develop a
data security plan, which must include certain elements designated by the FTC.280 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.281

3. Litigation Concerning Release Cards
Advocates developing litigation strategies concerning release cards (prepaid debit cards that
facilities use to pay amounts due to incarcerated people upon their release from custody (see
page 42)) should consider claims under the Electronic Funds Transfer Act (―
EFTA‖), as well as
claims founded in Fifth Amendment takings, unjust enrichment, and conversion. Release card
litigation recently received a major boost from Brown v. Stored Value Cards,282 in which the
Ninth Circuit reversed the district court‘s dismissal of a class action related to release cards in
Multnomah County, Oregon. This section reviews the types of claims that appear to have
promise based on Brown and rulings from federal district courts.
While a variety of potential causes of action related to release cards exist, practitioners should
begin by considering claims under the EFTA. Although EFTA‘s general applicability to release
cards was unclear in the past, the Consumer Financial Protection Bureau (―
CFPB‖) clarified
matters in its latest modification to Regulation E. Effective April 1, 2018, Regulation E‘s
273

Id. § 102, cmt. 12 (―[
O]nly stored value that consists of a medium of exchange evidenced 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.‖).
274
Id. § 103(3); see also id. § 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).
275
E.g., Levitin, supra note 219, at 16 (―Afederal 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.‖).
276
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.
277
15 U.S.C. § 6809(3); 12 U.S.C. § 1843(k)(4)(A).
278
16 C.F.R. § 313.1(b).
279
Id. §§ 313.5 (annual privacy notices), 313.7 (opt-out procedure).
280
Id. § 314.4.
281
National Consumer Law Center, Fair Credit Reporting § 18.4.1.14 (9th ed. 2018).
282
Brown v. Stored Value Cards, Inc., 953 F.3d 567 (9th Cir. Mar. 16, 2020).

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definition of ―
account‖ includes prepaid accounts,283 and the CFPB‘s commentary explaining the
rule specifically cites release cards as a type of prepaid product that the new definition
covers.284 Moreover, the Brown court concluded that release cards constitute accounts under
the EFTA even in situations governed by the prior version of Regulation E.285
Three specific types of EFTA claims have potential. First are claims under the EFTA‘s prepaid
card provision, 15 U.S.C. § 1693l-1. Section 1693l-1 prohibits issuers of general-use prepaid
cards from charging dormancy fees, inactivity fees, or service fees (all of which the statute
defines) unless certain disclosures are made at the time of issuance and the card has been
inactive for at least 12 months.286
Early litigation resulted in uncertainty about whether § 1693l-1covered release cards because,
to qualify as a general-use prepaid card, a card must be ―
marketed to the general public.‖287
One federal circuit court now has indicated that this standard can be met. Citing evidence of the
defendant‘s advertising practices, the Ninth Circuit concluded in Brown that the release cards in
Multnomah County, Oregon were marketed to the general public because ―
[w]hen inmates are
released from jail or prison, they reenter the general public. And when Defendants marketed the
cards to Multnomah County, they indirectly marketed them to these released inmates.‖288
The second type of potential EFTA claim is rooted in 15 U.S.C. § 1693i, which prohibits the
issuance, absent certain disclosures, of unsolicited, validated cards that provide access to a
―
consumer‘s account‖ (this includes debit cards). In Brown, the plaintiff had alleged that a
release card was foisted upon her without consent and without her applying for or requesting it
and that when people leave incarceration, the release cards are already activated and ready to
use. The Ninth Circuit held that the district court abused its discretion by denying leave to
amend the complaint because the proposed complaint stated a claim for relief under § 1693i.289
Three federal district courts also have allowed § 1693i claims to proceed, although none has
issued a ruling on the merits.290
The third, and most untested, type of EFTA claim relates to the compulsory-use provision,
which prevents payers from requiring a consumer to use a certain financial institution (including
a specific prepaid card) for receipt of wages or government benefits.291 During the CFPB‘s last
EFTA rulemaking, several advocacy groups requested that the agency extend the compulsory-

283

12 C.F.R. § 1005.2(b)(3) (2018).
See Bureau of Consumer Financial Protection, Prepaid Accounts under the Electronic Fund Transfer Act (Regulation E)
and the Truth in Lending Act (Regulation Z),‖ [hereinafter ―R
egulation E Amendments‖] 81 FED. REG. 83934, 83968 (Nov.
22, 2016).
285
Brown, 853 F.3d at 574.
286
15 U.S.C. § 1693l-1(b)(2); see also 12 C.F.R. § 1005.20(d) (implementing regulations).
287
See 15 U.S.C. § 1693l-1(a)(2)(D)(iv).
288
Brown, 953 F.3d at 573; see also Reichert v. Keefe Commissary Network, 331 F.R.D. 541 (W.D. Wash. May 8, 2019)
(certifying class claim under § 1693l-1).
289
Brown, 953 F.3d at 575.
290
See Humphrey v. Stored Value Cards, 355 F. Supp. 3d 638, 642–43 (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 decision for interlocutory appeal); Reichert, 331 F.R.D. at 558 (order certifying class).
291
12 C.F.R. § 1005.10(e)(2).
284

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use prohibition to release cards.292 Although the CFPB 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.‖293 While helpful, this clarification
still leaves some uncertainty because it does not specify 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, Regulation E would prohibit mandatory use of
release cards to make such payments.
In addition to EFTA claims, advocates should consider the availability of non-EFTA claims. Most
release-card class actions have included non-EFTA claims such as Fifth Amendment takings,
unjust enrichment, conversion, and violations of state UDAP statutes. Such claims frequently
have survived motions to dismiss or led to advantageous settlements.294 In Brown, the district
court granted summary judgment to the defendants on the plaintiff‘s takings claim, reasoning
that the plaintiff had not suffered a taking because the release cards were the functional
equivalent of their confiscated cash. The Ninth Circuit reversed this ruling, calling the district
court‘s analysis ―
misguided.‖295 Because ―
the release card deteriorates in value quickly and
permanently‖ (due to the fees), the Ninth Circuit concluded that the cards are not the functional
equivalent of cash.296 The court stated that this ruling regarding functional equivalency did not
conclude the matter, explaining that ―
[t]he next step in a fees-for-services takings analysis is to
determine whether the fees are a ‗fair approximation of the cost of benefits supplied.‘‖297 The
Ninth Circuit left it to the district court to conduct this analysis on remand, but noted that ―
the
extent to which the fees were avoidable might be a factor‖ for the district court to consider
on remand.298
Encouragingly, most courts have held that arbitration provisions in release-card contracts are
unenforceable, given the inability of consumers to realistically withhold their consent (see page
64 for further discussion of arbitration clauses).299 The outlier case, where an arbitration
292

See Comments of Stephen Raher, Prison Pol‘y Initiative, supra note 233, at 8–9.
Regulation E Amendments, supra note 284, at 83985.
294
See, e.g., Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2018 WL 2018452, at *3 (W.D. Wash. May 1,
2018) (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 (Aug. 25,
2016) (denying motion to dismiss plaintiff‘s state law claims for conversion and unjust enrichment), subsequent decision,
953 F.3d 567, 576 n.7 (9th Cir. Mar. 16, 2020) (vacating district court‘s later ruling granting summary judgment to
defendants on claims for conversion and unjust enrichment); see also First Amended Complaint, Adams v. Cradduck, No.
13-cv-05074-PKH (W.D. Ark. May 9, 2013), ECF No. 6 (pleading Fourth and Fourteenth Amendment violations (actionable
through § 1983), conversion, and trespass to chattels; class settlement subsequently approved).
295
Brown, 953 F.3d at 575.
296
Id.
297
Id. at 576 (quoting U.S. v. Sperry Corp., 493 U.S. 52, 60 (1989)).
298
Id.
299
Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2018 WL 2018452, at *2 (W.D. Wash. May 1, 2018)
(denying motions to compel arbitration; ―[a
]ll 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, at *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
293

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agreement was held enforceable, is a case from Florida where the federal district court found
the plaintiff had been given a clear choice of receiving his funds via debit card or check.300

4. Potential Claims across Prison Retail Transactions
In addition to the area-specific strategies discussed above, advocates should consider whether
they can use state UDAP laws, state limitations on local government revenue authority, or
antitrust law to challenge exploitative practices occurring across the prison retail industry.
i.

Challenging Prison Retail Prices and Practices Using State Unfair and Deceptive
Acts and Practices Laws

As discussed (see page 18), statutes in every state prohibit the use of unfair or deceptive acts
or practices in consumer transactions. In the past, UDAP laws were 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. Prison retail
vendors regularly employ tactics that may be deceptive, unfair, or unconscionable under
consumer laws. Notably, UDAP statutes not only allow enforcement by state attorneys general,
but also provide a private cause of action (although sometimes narrower in scope than the
enforcement authority granted to the attorney general.301 The private enforcement option is
critically important because attorneys general may not choose to aggressively promote the
rights of incarcerated people as doing so typically would be met with consternation by the
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
Prison retail vendors
officer (in the case of county jails).
regularly employ

tactics that may be
deceptive, unfair, or
unconscionable under
consumer laws.

As defined by the FTC, a deceptive practice requires a false or
misleading material claim or omission that is likely to mislead a
consumer.302 Although deception is prohibited under the UDAP
statutes in most states,303 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).304 Advertisements, promotional materials, and
product descriptions published by prison retailer vendors frequently contain deceptive claims.305

is not clear that Plaintiff was presented with a meaningful choice, as such I DENY the Motion to Compel.‖) (emphasis in
original); see also Regan v. Stored Value Cards, Inc., 85 F. Supp. 3d 1357 (N.D. Ga. 2015), aff‟d sub nom., 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).
300
Pope v. EZ Card & Kiosk, L.L.C., No. 15-cv-61046, 2015 WL 5308852 (S.D. Fla. Sept. 11, 2015).
301
See generally National Consumer Law Center, Unfair and Deceptive Acts and Practices § 12.2 (9th ed. 2016).
302
In re 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 circumstances, and third, the representation, omission, or practice is material.‖).
303
CARTER, supra note 59, at 12–14 (48 states plus D.C. have broadly worded prohibitions on deception).
304
National Consumer Law Center, Unfair and Deceptive Acts and Practices § 4.2.3.1 (9th ed. 2016).
305
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,

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For example, the suggestion that a computer tablet has functions that it lacks in reality could be
deceptive,306 as could advertised phone rates that do not adequately disclose or explain fees.307
Most state UDAP statutes broadly prohibit unfair or unconscionable practices, although a few of
them limit or deny a private cause of action to enforce the broad prohibition.308 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.‖309 Other jurisdictions have employed even more expansive
definitions of unfairness that seek to root out all manner of inequitable conduct.310
Unconscionability is typically defined by reference to various non-exclusive factors that focus on
whether a merchant took advantage of a consumer‘s vulnerability or knowingly structured a
transaction in a particularly egregious manner.311 Thus, in jurisdictions that recognize claims for
unfair or unconscionable practices, prison retail customers may frequently have actionable
claims because of their inability to avoid injury: prison retailers sell essential goods (food,
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.‖312
The following subsections discuss different types of consumer injuries that may give rise to
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 (―
UCC‖) and the
Magnuson-Moss Warranty Act.
ii.

Prices

Consumers who challenge prices should take care to analogize prison retail pricing to practices
that have previously formed the basis for valid UDAP claims. Such practices include using
monopoly power to extract excessive fees313 and paying kickbacks to the issuer of a
government contract.314 Some jurisdictions may recognize unreasonably high prices as
unconscionable in and of themselves.315 Other jurisdictions may require some type of
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.‖).
306
See In re Sony PS3 Other OS Litig., 551 Fed. Appx. 916, 921–22 (9th Cir. 2014) (misleading statements about computer
functionality and operating life were actionable under California False Advertising Law).
307
Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1163–64 (2000) (company‘s imposition of lawful fees was nonetheless
actionable as deceptive practice because company failed ―t
o 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‖).
308
CARTER, supra note 59, 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).
309
15 U.S.C. § 45(n).
310
National Consumer Law Center, Unfair and Deceptive Acts and Practices § 4.3.3.1 (9th ed. 2016).
311
Id. § 4.4.2; see also Uniform Consumer Sales Practices Act § 4 (factors determining unconscionable practices).
312
James v. Global Tel*Link Corp., No. 13-cv-4989, 2018 WL 3727371, at *2 (D.N.J. Aug. 6, 2018) (granting motion to
certify class as to two claims).
313
E.g., Ford v. ChartOne, Inc., 908 A.2d 72 (D.C. 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).
314
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).
315
Via Christi Regional Med. Ctr. v. Reed, 314 F.3d 852, 868 (Kan. 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);

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independent wrongdoing in addition to unreasonably high prices.316 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.317 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.318
In the context of prison retailing, consumers have used UDAP statutes to challenge the inflated
monopoly prices that ICS carriers charge. For example, plaintiffs in Arkansas challenged
Securus‘s intrastate rates under that state‘s Deceptive Trade Practices Act.319 The district court
concluded that the plaintiffs‘ allegations that Securus ―
improperly exploit[ed] economic leverage
resulting from exclusive-provider contracts‖ formed the basis for an actionable claim
of unconscionability.320
In a still-pending New Jersey class action, the federal district court denied Global Tel*Link‘s
motion to dismiss claims under the New Jersey Consumer Fraud Act, holding that the plaintiffs
had stated a claim of unconscionability based on the anti-competitive way in which rates were
imposed upon a vulnerable population (further holding that a separate act of deception was
not required).321
Most recently, a federal district court denied Securus‘s attempt to dismiss a class action claim
under the Massachusetts consumer protection statute.322 The plaintiffs‘ theory in this case,
Pearson v. Hodgson (also discussed on pages 45 and 58), relies on an earlier state-court
ruling, Souza v. Sheriff of Bristol County,323 which held that sheriffs may only impose and collect
fees that are specifically authorized by statute. The Pearson plaintiffs argue that the sheriff
violated Souza by collecting fees (called ―
site commissions‖) that are not authorized by statute,
and that Securus violated the Massachusetts UDAP statute by assisting the sheriff in this
unlawful activity. In rejecting Securus‘s motion to dismiss, the court found that the plaintiffs were
Kugler v. Romain, 279 A.2d 640, 653–54 (N.J. 1971) (defendant‘s targeting low-income consumers with sales of ―p
ractically
worthless‖ educational materials for two-and-a-half times a reasonable market price was unconscionable).
316
E.g., Galvan v. Northwestern Memorial Hosp., 888 N.E.2d 529, 536 (Ill. App. Ct. 2008) (―Ch
arging 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., 77 P.3d 1288 (Kan. Ct. App. 2003) (per curiam; table) (high price not actionable under Kansas Consumer
Protection Act absent deceptive bargaining conduct or unequal bargaining power).
317
ChartOne, 908 A.2d at 90–92.
318
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, 643
N.E.2d 734, 742–43 (Ill. 1994) (broker‘s imposition of a ―f
oreign 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).
319
Antoon v. Securus Tech., No. 5:15-cv-5008, 2017 WL 2124466 (W.D. Ark. May 15, 2017).
320
Id. at *6.
321
James v. Global Tel*Link, Corp., No. 13-cv-4989, 2018 WL 3736478, at *7 (D.N.J. Aug. 6, 2018) (unconscionability claim
is ―n
ot 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));
see also James v. Global Tel*Link, Corp., No. 13-cv-4989, 2020 WL 998858, (D.N.J. Mar. 2, 2020) (denying GTL‘s motion
for judgment on the pleadings as to New Jersey Consumer Fraud Act (―CFA‖) claims; declining to reexamine its conclusion
that the CFA claims do not require deceptive conduct).
322
Pearson v. Hodgson, 363 F. Supp. 3d 197, 207–08 (D. Mass. 2018).
323
Souza v. Sheriff of Bristol County, 918 N.E.2d 823 (Mass. 2010).

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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.324
iii.

Terms and Conditions

Contracts of adhesion with oppressive terms often are actionable for either of two interrelated
reasons: (1) complex contract language can deceive consumers into misunderstanding the
terms of a bargain, or (2) consumers‘ inability to negotiate terms leaves them with no
meaningful choice.325 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 toward the vendor may be actionable as unfair
or unconscionable.326
A prison retail vendor may face liability for deceptive practices if it uses advertising that portrays
services as achieving a specific purpose (e.g., communicating with a loved one) while
simultaneously forcing consumers to assent to contract terms that excuse the vendor from
actually providing the advertised service.327 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.328 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.‖ 329 This blanket
exculpatory term ignores the numerous situations in which JPay could be liable for an
erroneous transfer due to its own negligence.330 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.331 This provision is not only unfair, but also may be unenforceable
as an attempt to evade the common-law duties of a bailee.332
324

Pearson, 363 F. Supp. 3d at 207–08.
National Consumer Law Center, Unfair and Deceptive Acts and Practices § 4.3.2.3.4 (9th ed. 2016).
326
E.g., Barrett-O‘Neill v. Lalo, L.L.C., 171 F. Supp. 3d 725, 740–41 (S.D. Ohio 2016) (requiring a consumer to enter into a
―s
ubstantially one-sided transaction‖ can constitute unconscionable practice under Ohio Consumer Sales Practices Act);
Goodwin v. Hole No. 4, L.L.C., No. No. 2:06-cv-679, 2006 WL 3327990, at *8 (D. Utah Nov. 15, 2006) (contract that gave
seller the ―u
nilateral ability to defeat the purpose of the contract (and the [customers]‘ justified expectations) rings of
substantive unconscionability‖).
327
See JPAY, INC., PAYMENTS TERMS OF SERVICE ¶ 18 (Mar. 10, 2020).
328
See id.
329
Id. ¶ 2.
330
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).
331
JPAY, INC., PAYMENTS TERMS OF SERVICE, supra note 327, ¶ 7.
332
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.
325

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Vendors‘ privacy policies also contain troublesome provisions that potentially could be
challenged, especially when it comes to 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.333 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.‖334
Yet Securus‘s customer-facing terms and conditions provide that Securus ―
may share your
contact information, account information and history, call details, financial transactions and your
voice and video records with law enforcement personnel and/or correctional facilities and
certain third parties for use in connection with and in support of law enforcement activities,‖ 335
and that Securus makes no ―
guarantees regarding the . . . actions by law enforcement officials
336
in handling the data.‖ In other words, Securus uses form contracts to require lawenforcement personnel to observe certain laws, while seemingly requiring the affected
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 may be vulnerable to a challenge as unfair or unconscionable.
iv.

Sales of Goods

Sales of goods such as food, toiletries, clothing, and electronic hardware (including computer
tablets) implicate both UDAP statutes and consumers‘ rights under Article 2 of the UCC. The
rights of buyers regarding defective goods are likely to become more relevant to the extent that
high-priced computer tablets of questionable quality become more common.337 Because prison
retailers tend to offer the most parsimonious express warranties imaginable, consumers often
will have to rely on the implied warranty of merchantability available under Article 2 of the
UCC.338 The implied warranty of fitness for a particular purpose339 also may be relevant in
situations where a seller encourages consumer misconceptions, such as leading customers to
333

Securus has described 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, at 261 (Fort Bend County, Texas) (Oct. 17, 2017) (on file with authors).
See generally CATHY O‘NEIL, W EAPONS OF MATH DESTRUCTION: HOW BIG DATA INCREASES INQUALITY AND THREATENS
DEMOCRACY (2016); Anya Prince & Daniel Schwarcz, Proxy Discrimination in the Age of Artificial Intelligence and Big Data,
IOWA L. REV. (forthcoming 2020) (on file with authors and available on SSRN); Master Services Agreement between Securus
Technologies, Inc. and Fort Bend County (Texas) (dated Feb. 6, 2018) (on file with authors).
334
Master Services Agreement between Securus Technologies, Inc. and Fort Bend County, supra note 333, 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.
335
SECURUS TECHNOLOGIES, INC., FRIENDS AND FAMILY TERMS AND CONDITIONS, Privacy Policy, ―
How do we share data about
you?; see also id. (―A
ll of this data may be stored, monitored, searched, analyzed and transferred among law enforcement
agencies for law enforcement purposes.‖)
336
SECURUS TECHNOLOGIES, INC., FRIENDS AND FAMILY TERMS AND CONDITIONS, General Terms and Conditions, Limitation of
Liability. In addition, to the extent that the Threads database includes audio or video of children under thirteen, the use of
such data may violate the Children‗s Online Privacy Protection Act.
337
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. See Motion for Appointment of Counsel, Gard v. Fluke, No. 18-cv-5040-JLV (D.S.D. Jun. 19, 2018), ECF No. 3
(―T
he tablet program is defective and prone to lockouts and other network and system failures. For a year, promised repairs
and updated have not provided petitioner with meaningful access to any legal materials.‖).
338
U.C.C. § 2-314 (AM LAW. INST. 2017).
339
U.C.C. § 2-315 (AM LAW. INST. 2017).

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believe that a tablet performs a specific function, (e.g., accessing educational content), when in
fact it does not.
Prison retailers often impose terms and conditions that misleadingly purport to ―
disclaim‖ all
implied warranties.340 The enforceability of such a provision is questionable. About one-third of
the states have special non-UCC statutes that restrict or prohibit the ability of sellers to disclaim
implied warranties.341 Moreover, most courts hold that express warranties cannot be
disclaimed.342 The UCC defines express warranties broadly, including any description of the
goods that is made part of the basis of the bargain.343 It is likely that at least an express
warranty by description arises in every sale by a prison retailer.
If a prison retailer provides a ―
written warranty‖ as defined by the Magnuson-Moss Warranty
344
Act, it is not allowed to disclaim implied warranties at all,345 although it can, with disclosure,
written warranty‖ is a specialized
limit their duration to that of the written warranty.346 However, ―
347
term that does not include warranties by description. Unless a prison retailer issues a written
warranty in its own name—likely only if the retailer is having merchandise specially
manufactured for it and selling it under its own brand name—or affirmatively adopts the
manufacturer‘s warranty as its own, the Magnuson-Moss Act does not prevent the retailer from
disclaiming warranties.348
The merchandise sold by prison retailers often carries an extremely short manufacturer‘s
warranty. For example, Union Supply Company sells computer tablets that are covered by a
manifestly
three-month warranty.349 An excessively short warranty period may be found ―
350
unreasonable‖ or unconscionable under the UCC.
Other aspects of a prison retail warranty may also be found unconscionable. For example, the
warranty accompanying Union Supply Company‘s computer tablets requires that, if a defective
item is returned for a warranty claim, it must be accompanied by an original receipt and all of
the original accessories and packaging.351 This could be a consumer trap even in a regular freeworld transaction, but is particularly onerous for someone in prison, where customers may not

340

E.g., UNION SUPPLY GROUP, INC., TERMS OF USE, (disclaiming ―a
ny and all warranties, express or implied, for any
merchandise offered‖).
341
National Consumer Law Center, Consumer Warranty Law § 5.4.1 (5th ed. 2015).
342
Id. § 5.2.
343
U.C.C. § 2-313 (AM LAW. INST. 2017).
344
15 U.S.C. § 2301(6).
345
Id. § 2308(a).
346
Id. § 2308(b).
347
Id. § 2301(6). See National Consumer Law Center, Consumer Warranty Law § 2.2.3 (5th ed. 2015).
348
See National Consumer Law Center, Consumer Warranty Law § 2.3.2 (5th ed. 2015).
349
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) (requiring warranty terms to be ―m
ade available to the
consumer (or prospective consumer) prior to the sale of the product to him.‖).
350
U.C.C. § 1-302(b); National Consumer Law Center, Consumer Warranty Law § 7.7.4.6 (the duration of a warranty may
not be manifestly unreasonable and may be struck down if unconscionable).
351
UNION SUPPLY GROUP, INC., RULES AND REGULATIONS.

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even be allowed to keep the packaging.352 After imposing intricate and burdensome rules for
warranty claims, Union Supply Company further 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.353 The UCC invalidates restrictions on the buyer‘s remedies that cause a warranty to ―
fail
of its essential purpose,‖354 and broadly invalidates any unconscionable contract term.355 A
warranty that is so limited as to be illusory may also violate a UDAP statute‘s prohibition of
unfairness or deception.356 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;‖357 advocates should note, however, that
there is no private cause of action under this provision.
The use of oppressive warranty terms is not unique to Union Supply. The warranty for GTL‘s
tablets lasts 12 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.‖358 If GTL determines the product is not eligible, the customer has no appeal rights and
does not receive the original device back; his only recourse is ―
to purchase a new tablet.‖359
v.

Challenging Site Commissions Using State Limitations on Local Governments‘
Revenue Authority

Local governments‘ power to raise revenue, like their other legal functions, derives from
authority delegated to them by the state. The various substantive and procedural restrictions
that accompany these grants of authority accordingly limit local governments‘ ability to
generate revenue.
In 2010, for example, the Massachusetts Supreme Judicial Court (―
SJC‖) struck down a
program of fees that a county sheriff had imposed on prisoners on the grounds that the sheriff
lacked the specific legislative authority required by the state constitution.360 A class of prisoners
had challenged these fees—including fees on medical co-payments, haircuts, and GED
registration—by arguing in part that the sheriff lacked the statutory authority to impose them.
The SJC affirmed that sheriffs only have the powers conferred upon them by the legislature.361
352

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).
353
UNION SUPPLY GROUP, INC., RULES AND REGULATIONS, supra note 351.
354
U.C.C. § 2-719 (AM LAW. INST. 2017).
355
Id. § 2-302.
356
See, e.g., Roelle v. Orkin Exterminating Co., No. 00AP-14, 2000 WL 1664865, at *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). See generally National Consumer Law Center, Consumer Warranty Law
§ 11.1.7 (5th ed. 2015).
357
15 U.S.C. § 2310(c).
358
Contract Between Commw. of Penn. Dept. of Corr. and Global Tel*Link, Contract No. AGR-346, appx. G at Requirement
#103 (on file with authors). 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 415 (GTL Genesis 116-PA spec sheet).
359
Id. appx. G at Requirement #103.
360
See Souza v. Sheriff of Bristol County, 918 N.E.2d 823 (Mass. 2010).
361
Id. at 828–29.

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Citing authority establishing that statutory expression of one thing is the implied exclusion of
other things, the SJC concluded that ―
[h]ad the Legislature intended to authorize the sheriff to
impose the challenged fees, it would have said so expressly as it had done with other fees.‖362
Because no statute supplied the sheriff with the requisite express authority to collect the fees he
had imposed on the Souza plaintiffs, the charges were unlawful.363
Souza considered the limits of a sheriff‘s ability to directly impose financial assessments. To the
extent that privatization is commonly used to generate revenue streams for local governments
(through mandatory site commission payments and other comparable contracting
arrangements, for example),364 these same limitations may provide a vehicle for challenging
some of the onerous costs imposed on people who have contact with these systems.
Such a strategy will depend on the laws of the relevant jurisdiction as well as the nature of the
legal financial obligation at issue. A recent case, which seeks to apply the Souza holding to a
contract for prison phone services, provides one framework for challenging ―
user-fee‖
contracting models in states that similarly restrict local revenue authority. In Pearson v.
Hodgson, a class of consumers seeks to establish that the same restrictions that govern
sheriffs‘ ability to impose fees directly also should limit their ability to do so indirectly through the
―
site commission‖ private contracting model that has become pervasive in the corrections
industry. A federal district court adopted this legal argument in a ruling on a motion to dismiss
the plaintiffs‘ claims under the Massachusetts consumer protection statute.365
Where state restrictions on local governments‘ authority are clearly established and have been
interpreted to apply to financial assessments of any nature (rather than being limited to ―
taxes‖
but not ―
fees‖366), the primary legal question is likely to be whether advocates can apply the
limitations to the negotiation of private contracts. In Pearson, the plaintiffs pointed out that
removing from this statutory framework any revenues collected by private entities would have
the effect of providing a roadmap to evading the restrictions entirely. The court adopted this
argument, characterizing the question at stake as being about the separation of power across
legal institutions in the state.367
Advocates should be aware that this litigation strategy will be available only in states that
similarly restrict local governments‘ ability to raise revenue, and that also have not directly
authorized site commission payments. But where they exist, these restrictions provide an
addition legal tool for challenging governments‘ contracts with private vendors that require the
payment of ―
site commissions.‖
362

Id. at 833.
In a similar case, the Supreme Court of Michigan held in 2014 that county courts had authority to impose only those
costs that the state‘s legislature had separately authorized by statute. People v. Cunningham, 852 N.W.2d 118 (Mich.
2014).
364
See HIGHSMITH, COMMERCIALIZED (IN)JUSTICE, supra note 1, at 21 (observing that ―[t
]he business model of kickback
payments by private companies to government . . . is largely responsible for the aggressive cost-shifting to vulnerable
families that characterizes the corrections industry‖ and that ―[t
]hese kickbacks function as de facto taxes or government
fees—often assessed without authorization by any legislative body and seized from vulnerable families who are illpositioned to pay‖).
365
See Pearson v. Hodgson, 363 F. Supp. 3d 197, 204 (D. Mass. 2018).
366
See, e.g., Ariel Jurow Kleiman, Nonmarket Criminal Justice Fees, 71 HASTINGS L.J. (forthcoming 2020) (available on
SSRN).
367
Pearson, 363 F. Supp. 3d at 204–05.
363

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Antitrust Claims
Because prison retailers can use their market power to harm consumers, consumers may be able
to challenge certain trade practices of the prison retail industry under section 4 of the Clayton
Act.368 Aspects of prison retailing relevant to such antitrust claims include vendor exercise of
monopoly power, the oligopoly in the correctional telecommunications market, and collusion
between vendors and facilities in setting prices.
Practitioners should evaluate potentially relevant antitrust theories and concepts, such as the
concept of an essential facility. With the growth of prison retailing, incarcerated people increasingly
are expected to spend money on various goods and services, thus emphasizing the paramount
importance of vendors‘ ability to accept payments from trust accounts. Accordingly, if a
communications or commissary vendor also wins a contract to administer a facility‘s inmate trust
account, that firm may enjoy a bottleneck monopoly,369 and may use that power both to extract
fees from family members who often transfer money into their loved one‘s account and prevent
competition from other prison retailers who cannot easily access that trust account.
The larger viability of antitrust claims in the prison retail context depends in part on further
research regarding the size and composition of the market. Although this additional information is
needed, it is worth noting one recent development that indicates that regulators are aware of the
consolidation occurring within the ICS marketplace and the resulting lack of competition. In June
2018, Securus sought FCC permission to acquire ICS carrier Inmate Calling Solutions, LLC (doing
business as ICSolutions),370 a wholly owned subsidiary of commissary company Access
Corrections and the third largest ICS carrier in the market.371 Moody‘s Investor Service noted that
though the acquisition was ―
costly‖ for Securus, it would ―
eliminate[] an aggressive competitor in
the smaller facility space comprised of local and county jails.‖372
The Wright petitioners (see page 37) and others challenged the acquisition.373 Ultimately, after an
extended review by the FCC and the U.S. Department of Justice, Securus and ICSolutions
terminated the transaction.374 The abandonment of the merger was announced as a voluntary
action by the parties. However, the public statement of FCC Chairman Pai suggests that the FCC
was genuinely skeptical about the merger.375

368

15 U.S.C. § 15.
See generally James McAndrews, Antitrust Issues in Payment Systems: Bottlenecks, Access, and Essential Facilities,
FED. RESERVE BAN OF PHILADELPHIA: BUSINESS REVIEW 3 (Sept. 1995).
370
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).
371
Raher, The Company Store and the Literally Captive Market, supra note 1, at 75.
372
MOODY‘S SAYS SECURUS‘ RATINGS UNCHANGED FOLLOWING ADD-ON TO TERM LOAN, (May 7, 2018).
373
Aleks Kajstura, Families and advocates ask FCC to stop phone giant‟s further expansion, PRISON POL‘Y INITIATIVE BLOG
(July 17, 2018).
374
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).
375
Press Release, Fed. Commc‘ns Comm‘n, Chairman Pai Statement on Decision by Inmate Calling Services Providers to
Withdraw Merger Application (Apr. 2, 2019), (―F
CC staff concluded that this deal posed significant competitive concerns and
would not be in the public interest. I agree.‖).
369

Commercialized (In)Justice
Litigation Guide

IV. DEBT COLLECTION BY PRIVATE CONTRACTORS
State and local
governments are
increasingly
outsourcing the
collection of
criminal justice
debts to private
contractors.

Commercial bail and prison retailing are not the only instances of
privatization within the criminal legal system that give rise to consumer
abuses. State and local governments are increasingly outsourcing the
collection of criminal justice debts (resulting from fines, fees, and other
charges imposed on criminal defendants) to private contractors.376
These private debt collectors often are authorized to charge the debtor
significant collection costs. Some states expressly allow debt collectors
to collect fees and costs from individuals on top of the principal owed. In
Florida, for example, municipal debt collectors may add a 40%
surcharge to debts collected on behalf of local courts.377

Where private collectors engage in unfair or abusive debt collection practices, advocates should
determine whether their clients may benefit from the Fair Debt Collection Practices Act
(―
FDCPA‖) and state analogs. The FDCPA protects against a range of deceptive, misleading,
abusive, or unfair debt collection practices and provides a private right of action; a successful
plaintiff may recover actual and statutory damages, and attorney‘s fees and costs.378 In
determining whether the FDCPA applies, advocates must consider two threshold questions: (1)
whether the entity collecting the debt is a covered ―
debt collector‖ and (2) whether the
underlying obligation is a ―
debt.‖

A. Applying the Fair Debt Collection Practices Act to Private Debt
Collection Companies
The FDCPA does not apply to original creditors (i.e., the entity to whom the debt was owed
originally) or to ―
any officer or employee of the United States or any State to the extent that
collecting or attempting to collect any debt is in the performance of his official duties.‖379
However, the statute does apply to private debt collection companies.
The original creditor exclusion generally is not an obstacle here because, unlike in the
commercial bail context, these companies collect debt on behalf of another entity—the
government. Courts have concluded that the FDCPA applies to private, outside debt collectors,
even where the law expressly authorizes them to serve as debt collectors.380

376

SHAFROTH, ET AL., CONFRONTING CRIMINAL JUSTICE DEBT, supra note 1, at 122; see also Kornya, et al., Crimsumerism,
supra note 1, at 140.
377
FLA. STAT. § 28.246; see also FLA. STAT. § 938.35.
378
National Consumer Law Center, Fair Debt Collection §11.1 (9th ed. 2018).
379
15 U.S.C. § 1692a.
380
Kornya, et al., Crimsumerism, supra note 1, at 142–43; HIGHSMITH, COMMERCIALIZED (IN)JUSTICE, supra note 1, at 39;
SHAFROTH, ET AL., CONFRONTING CRIMINAL JUSTICE DEBT, supra note 1, at 123; see also Gillie v. Law Office of Eric A. Jones,
L.L.C., 785 F.3d 1091 (6th Cir. 2015) (rejecting argument by debt collection firm appointed by Ohio Attorney General to
collect state-connected student loans that it was excluded from the FDCPA as an ―
officer of the state‖), rev‟d on other
grounds and remanded sub nom. Sheriff v. Gillie, 136 S. Ct. 1594 (2016), and cert. granted, judgment vacated sub nom.
Jones v. Gillie, 136 S. Ct. 2446 (2016).

Commercialized (In)Justice
Litigation Guide

The more difficult obstacle to overcome when arguing for FDCPA coverage is the requirement
that the underlying monetary obligation constitute a ―
debt.‖ The FDCPA defines debt as an
obligation to pay arising out of a ―
transaction . . . primarily for personal, family, or household
purposes.‖381 In the government debt context, courts have interpreted this definition narrowly,
generally concluding that the term only covers consensual quid pro quo agreements to pay
governments for services, and not unilaterally imposed monetary penalties.382 There is good
reason to believe that this construction is overly narrow, and that courts have wrongly added a
requirement that a transaction be ―
consensual‖ to give rise to a debt under the FDCPA.383
Nonetheless, for now, the term ―
debt‖ has largely been interpreted by courts to exclude punitive
government fines and, arguably, victim restitution.384
Even under this cramped interpretation of ―
debt,‖ advocates still may
argue that ―
user fees,‖ such as pay-to-stay incarceration fees, indigent
defense reimbursement and other fees associated with trial or
representation costs, and supervision fees constitute ―
debts‖ under the
FDCPA.385 In building their arguments, advocates may look to cases
finding that unpaid traffic tolls, parking fees and related nonpayment
penalties for municipal lots, and utility user fees constitute debts within
the meaning of the FDCPA.386 The more consensual an obligation is
and the more similar it appears to a private marketplace transaction,
the more likely that courts will find the FDCPA applicable.

Even if something
does not
constitute a
“debt” within the
meaning of the
FDCPA, state debt
collection laws or
state UDAP
statutes
may apply.

Advocates considering cases involving criminal legal system debt collection also should recall
that even if something does not constitute a ―
debt‖ within the meaning of the FDCPA, state debt
collection laws387 or state Unfair and Deceptive Acts and Practices (―
UDAP‖) statutes388 may
apply. UDAP laws might be useful tools because they provide a broad cause of action for unfair
and deceptive practices generally, though the coverage and applicability to debt collection
practices varies from state to state.389

381

15 U.S.C. § 1692a(5).
See, e.g., Pollice v. Nat‘l Tax Funding, L.P., 225 F.3d 379, 407 (3d Cir. 2000); see generally National Consumer Law
Center, Collection Actions § 11.7.4.3 (4th ed. 2017).
383
See National Consumer Law Center, Collection Actions § 11.7.4.3 (4th ed. 2017); see also National Consumer Law
Center, Fair Debt Collection § 4.4.2.3 (9th ed. 2018).
384
See, e.g., Gulley v. Markoff & Krasny, 664 F.3d 1073, 1074–75 (7th Cir. 2011) (municipal fines do not qualify as debts);
Herrera v. AllianceOne Receivable Mgmt., Inc., 2015 WL 3796123 (S.D. Cal. June 18, 2015) (traffic fines); Worley v. Mun.
Collections of Am., Inc., No. 14 C 2418, 2015 WL 890878 (N.D. Ill. Feb. 27, 2015) (municipal fines); Stubbs v. City of Center
Point, Alabama, 988 F. Supp. 2d 1270, 1276 (N.D. Ala. 2013) (―
[A] traffic ticket does not constitute a ‗debt‘ under the
FDCPA.‖); Gibson v. Prof‘l Account Mgmt., 2011 WL 6019958 (E.D. Mich. Dec. 1, 2011) (parking ticket); Harper v.
Collection Bureau, Inc., 2007 WL 4287293 (W.D. Wash. Dec. 4, 2007) (court fine resulting from an arrest); see also
SHAFROTH, ET AL., CONFRONTING CRIMINAL JUSTICE DEBT, supra note 1, at 124 (explaining that the underlying monetary
obligation does not constitute a debt where the debt obligation arise from a fine relating to a debtors failure to pay a different
obligation to the government).
385
Kornya, et al., Crimsumerism, supra note 1, at 141.
386
See National Consumer Law Center, Collection Actions § 11.7.4.3 (4th ed. 2017); see also Franklin v. Parking Revenue
Recovery Servs., Inc., 832 F.3d 741 (7th Cir. 2016); Brown v. Transurban USA, Inc., 144 F. Supp. 3d 809, 842 (E.D. Va.
2015).
387
See generally National Consumer Law Center, Fair Debt Collection § 16.2 (9th ed. 2018).
388
Id. § 16.3.
389
For a state-by-state summary of each state UDAP statute‘s coverage of debt collection, see National Consumer Law
Center, Fair Debt Collection § 16.3.3.6 (9th ed. 2018).
382

Commercialized (In)Justice
Litigation Guide

B. Unfair and Abusive Practices Prohibited by the Fair Debt
Collection Practices Act
Where the FDCPA is applicable, the statute protects debtors against a range of deceptive,
abusive, and unfair practices. In the criminal justice debt context, the most relevant prohibited
conduct includes making false threats of arrest for non-payment; communicating with third
parties about the debt; misrepresenting the character, amount, or status of a debt; failing to
abide by requests to case further communications; and using deceptive or misleading practices
to collect the debt.390
For instance, an advocate might argue that a private debt collection company‘s conduct is
misleading under the FDCPA if the company threatens that nonpayment may result in
incarceration without informing the debtor that a court generally must determine that an
individual had the ability to pay the debt prior to ordering incarceration for nonpayment.391
In making this argument, advocates should bear in mind that the FDCPA is a strict liability
statute, meaning that it does not depend on whether the debt collector intended to deceive or
mislead the debtor.392 Further, most courts apply the ―
least sophisticated consumer‖ standard,
which asks whether a debt collector‘s communication would tend to mislead an unsophisticated
but reasonable consumer.393 If, for instance, if a debtor did not know that she may be
incarcerated only if she fails to pay and is financially able to pay, she—as an unsophisticated
but reasonable consumer—would likely be misled into believing that she would be incarcerated
if she did not pay the debt.394 As a result of the debt collector‘s misleading statement, the debtor
might be persuaded to pay money that she would otherwise dedicate to necessities, potentially
leading to harms such as eviction, foreclosure, and hunger.395

390

Kornya, et al., Crimsumerism, supra note 1, at 143 (citing 15 U.S.C. §§ 1692e(4)–(5), c(b), e(2), b(6), c(a)(2),
respectively).
391
Id.; Bearden v. Georgia, 461 U.S. 660, 673 (1983).
392
National Consumer Law Center, Fair Debt Collection § 3.2.4 (9th ed. 2018); see also Arias v. Gutman, Mintz, Baker &
Sonnenfeldt L.L.P., 875 F.3d 128, 134 (2d Cir. 2017); Oliva v. Blatt, Hasenmiller, Leibsker & Moore L.L.C., 864 F.3d 492,
502 (7th Cir. 2017), cert. denied, 138 S. Ct. 1283, 200 L. Ed. 2d 469 (2018); Stratton v. Portfolio Recovery Assocs., L.L.C.,
770 F.3d 443 (6th Cir. 2014); Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109 (9th Cir. 2014), as amended on denial
of reh‟g and reh‟g en banc (Oct. 31, 2014); Crawford v. LVNV Funding, L.L.C., 758 F.3d 1254, 1259 n.4 (11th Cir. 2014);
Glover v. F.D.I.C., 698 F.3d 139 (3d Cir. 2012); McLean v. Ray, 488 Fed. Appx. 677 (4th Cir. July 17, 2012); Picht v. John
R. Hawks, Ltd., 236 F.3d 446, 451 (8th Cir. 2001).
393
See, e.g., Altman v. J.C. Christensen & Assoc., Inc., 786 F.3d 191 (2d Cir. 2015); LeBlanc v. Unifund CCR Partners, 601
F.3d 1185, 1194 (11th Cir. 2010); Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1163 (9th Cir. 2006);
Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993); Smith v. Transworld Sys., Inc., 953 F.2d 1025, 1028 (6th Cir.
1992); Graziano v. Harrison, 950 F.2d 107, 111 (3d Cir. 1991); see generally National Consumer Law Center, Fair Debt
Collection §§ 3.2.1.4, 7.2.3 (9th ed. 2018).
394
A similar sort of violation-by-omission occurred in a recent Seventh Circuit case. See Pantoja v. Portfolio Recovery
Assoc., 852 F.3d 679 (7th Cir. 2017), cert denied, 138 S. Ct. 736 (2018). In Pantoja, the court determined that
corresponding with debtors without also warning them that certain actions that they took could revive a debt outside of the
statute of limitations violated the FDCPA. Id. at 687.
395
Kornya, et al., Crimsumerism, supra note 1, at 144.

Commercialized (In)Justice
Litigation Guide

Private Probation Companies
Private probation is another way that for-profit companies have infiltrated the criminal legal system
and imposed additional costs on impacted individuals. Some states allow counties and municipalities
to contract with private probation companies to administer their probation systems, particularly for
lower level offenses.396 Private companies often receive compensation through user fees paid by
those on probation rather than through a contract price paid by the government. This arrangement
imposes the cost of probation on the individual subject to it.
Typically, individuals must pay a monthly fee to the private company. Human Rights Watch
conducted an extensive study of private probation in the South and concluded that, under the basic
model, the probation companies charge all individuals on probation flat monthly supervision fees, and
courts are contractually obligated to sentence these individuals to pay the fees.397 If an individual
cannot pay the supervision fee, they often may enter into a payment plan, which can result in
additional charges, such as interest, fees, and/or surcharges.398
Private probation costs may not end there. Private probation may include other requirements that
carry additional fees and costs, including drug testing, required counseling or other treatments or
courses, and electronic monitoring.399 Companies also may charge administrative fees for enrollment,
reinstatement, records, or late or partial payments.400
The poorest people may end up paying the highest amount of supervision fees. In some states, the
judge may shorten the supervised probation period if the individual on probation entirely pays off all
fees, fine, and other costs.401 In contrast, if an individual fails to make all the required payments within
the probation period, the judge may extend supervised probation until the individual pays all of these
debts, so the individual incurs more monthly fees.402 Private probation schemes along these lines
have been challenged on constitutional grounds in court.403
Coercive or unfair debt collection practices may be particularly likely when jurisdictions make
payment of criminal justice debts a condition of probation and use private probation companies to
collect such payments. These companies then may have a strong financial interest in coercing
payments, coupled with tremendous coercive power stemming from their role in determining whether
an individual‘s probation is extended or revoked.

396

HIGHSMITH, COMMERCIALIZED (IN)JUSTICE, supra note 1, at 30–31. Though this section is focused on post-trial supervision,
in many jurisdictions, the same companies also supervise individuals on pre-trial release or in diversion programs. Human
Rights Watch, Set Up to Fail at 20 (Feb. 20, 2018). Additionally, in some jurisdictions, individuals who cannot pay their court
fines and fees are placed on probation until the balance is paid. This form of probation, referred to as ―
pay only probation,‖
is really a form of collection and does not entail traditional supervision. Kornya, et al., Crimsumerism, supra note 1, at 141.
397
Human Rights Watch, Profiting from Probation: America‟s “Offender-Funded” Probation Industry (Feb. 5, 2014).
398
Human Rights Watch, Set Up to Fail, supra note 396, at 40–41.
399
Id. at 42–44.
400
Id. at 40.
401
Id. at 41.
402
Id.
403
See, e.g., Rodriguez v. Providence Cmty. Corr., Inc., 191 F. Supp. 3d 758, 776 (M.D. Tenn. 2016), appeal dismissed due
to parties‟ stipulation to dismiss, 2018 WL 6978402 (6th Cir. Sept. 28, 2018); see also National Consumer Law Center,
Collection Actions § 11.7.1.2 (4th ed. 2017) (noting that challenges to criminal justice debt schemes that irrationally
discriminate on the basis of wealth, or that discriminatorily infringe on a fundamental right or interest of the poor, may be
viable under the Equal Protection Clause).

Commercialized (In)Justice
Litigation Guide

V. POTENTIAL OBSTACLES TO LITIGATION
In addition to the industry- and claim-specific obstacles to litigation mentioned in the preceding
sections, like those presented by the McCarran-Ferguson Act and statutory scope issues,
advocates should be aware of general obstacles that may arise in consumer litigation involving
the bail and corrections industry. This section highlights two potential obstacles that are of
particular concern when litigating claims against private companies involved in the criminal legal
system: arbitration clauses and the filed-rate doctrine.
In addition to these obstacles, which are largely specific to litigating against private entities,
plaintiffs may encounter defenses that are common when litigating against government actors
and entities claiming to act on behalf of the government. These include immunity and state
action defenses, which are beyond the scope of this guide.404

A. Arbitration
One potential obstacle to challenging bail and corrections industry abuses through consumer
litigation is the existence of mandatory pre-dispute arbitration agreements that the company
involved often includes in contracts or terms and conditions. In brief, a ―
mandatory pre-dispute
arbitration agreement‖ is a contractual provision, agreed to in advance of any dispute or claim,
which requires a party to take any claims that may later arise to arbitration instead of to court.405
Often called ―
forced arbitration clauses‖ in the consumer context because consumers rarely
have a realistic way to avoid them, these fine-print terms buried in contracts require consumers
to give up the right to assert claims in court as a condition of receiving goods or services from
the company. The arbitration clause requires the individual to bring their claims in a private
forum selected by the company instead. In the vast majority of cases, the arbitration agreement
will also force consumers to bring their claims individually—that is, without access to the class
action procedures that are often critical in affirmative litigation.
In general, businesses have been able to enforce arbitration against consumers, workers, and
others this way because of the Supreme Court‘s expansive interpretations of the Federal
Arbitration Act (―
FAA‖).406 A series of recent Supreme Court decisions has expanded the FAA‘s
reach to cover almost all consumer (and employment) contracts, and has allowed drafters to
include so-called ―
class waivers‖ in their arbitration agreements to force individuals to give up
their right to participate in class actions.407

404

For a discussion of immunity issues in the criminal justice debt context, see National Consumer Law Center, Collection
Actions § 11.7.6 (4th ed. 2017).
405
For a thorough treatment of arbitration agreements, including in depth discussions of challenging the enforceability of
arbitration agreements and pursuing consumer claims in arbitration, see National Consumer Law Center, Consumer
Arbitration Agreements (8th ed. 2020).
406
9 U.S.C. §§ 1–16; see generally National Consumer Law Center, Consumer Arbitration Agreements § 3.3.3.1 (8th ed.
2020).
407
Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228 (2013); AT&T Mobility L.L.C. v. Concepcion, 563 U.S. 333 (2011).

Commercialized (In)Justice
Litigation Guide

Mandatory arbitration
provisions and classaction prohibitions are
ubiquitous in the terms
of prison retail
sales contracts.

These mandatory arbitration provisions and class-action
prohibitions are ubiquitous in the terms of prison retail sales
contracts. For example, GTL includes a broad arbitration
clause and class-action ban in its terms.408 JPay publishes
separate terms and conditions for its various services and
products, all of which require mandatory arbitration
of claims.409

In fighting the enforcement of arbitration agreements (and class waivers), advocates should
look first to the conventional bases for avoiding arbitration. First, because arbitration is a
creature of contract, before a court can compel arbitration of any dispute it must be assured that
the parties actually have entered into an agreement to arbitrate.410 The fact that a consumer
has not read or understood an arbitration agreement generally is not sufficient to establish that
she has not entered into an agreement to arbitrate. However, the coercive nature of prison retail
and other corrections industry ―
agreements,‖ wherein people who are incarcerated may not
have the option to forgo a ―
service‖ or have access to contract terms and conditions may
undermine contract formation.411
Second, advocates should look for features of the arbitration agreement that might render it
unconscionable or otherwise unenforceable as a matter of federal law, such as because it
conflicts with the plaintiff‘s ability to vindicate federal rights.412 These challengeable features
may include arbitration agreements that force consumers to waive the right to bring certain
substantive claims or recover certain remedies otherwise available under law, or terms that
require payment of excessive costs and fees in arbitration.
Advocates have had some success resisting arbitration agreements in the prison retail context.
For example, 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.413 Further, courts have largely declined
to enforce arbitration provisions in the release card context, finding that cardholders were given
no other way to obtain their money, and therefore any agreement to arbitrate was not

408

GLOBAL TEL*LINK CORP., TERMS & CONDITIONS § R (dated Mar. 30, 2015).
E.g., JPAY, INC., PAYMENTS TERMS OF SERVICE, supra note 327, ¶ 15; see also Comments of Prison Policy Initiative at 5,
Prepaid Accounts under the Electronic Fund Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z), Dkt.
No. CFPB-2014-0031 (Mar. 18, 2015).
410
See, e.g., Sgouros v. TransUnion Corp., 817 F.3d 1029, 1036 (7th Cir. 2016) (―T
hat text distracted the purchaser from
the Service Agreement by informing him that clicking served a particular purpose unrelated to the Agreement.‖); Nguyen v.
Barnes & Noble Inc., 763 F.3d 1171, 1177 (9th Cir. 2014) (―
[W]here a website makes its terms of use available via a
conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any
affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—
without more—is insufficient to give rise to constructive notice.‖); Schnabel v. Trilegiant Corp., 697 F.3d 110 (2d Cir. 2012);
see also National Consumer Law Center, Consumer Arbitration Agreements § 4 (8th ed. 2020).
411
See Comments of Stephen Raher, Prison Pol‘y Initiative, supra note 233, at 5 & n.25.
412
See National Consumer Law Center, Consumer Arbitration Agreements § 8 (8th ed. 2020).
413
James v. Global Tel*Link Corp., No. 13-4989, 2016 WL 589676, at *4–7 (D.N.J. Feb. 11, 2016), aff‟d, 852 F.3d 262 (3d
Cir. 2017). Also note that the broad arbitration and class-action ban in GTL‘s terms fails to identify an arbitral forum, which
raises further questions about enforceability.
409

Commercialized (In)Justice
Litigation Guide

voluntary.414 Advocates should remain wary, however, as the prison retail industry presumably
learns from its missteps and engages in ongoing efforts to fashion more ironclad
arbitration provisions.

B. Filed-Rate Doctrine
In both bail and telecommunications cases, advocates may face arguments that the filed-rate
doctrine bars their claims. The relevance of this doctrine and the availability of arguments
against its application will vary based on the jurisdiction, the cause of action selected, and the
relief sought. Accordingly, this section provides an overview of the doctrine and some general
arguments that the doctrine does not preclude suit.

The filed-rate doctrine
bars lawsuits that
involve challenges to
the reasonableness of
rates contained in a
filed tariff.

The filed-rate doctrine is a court-created rule that bars lawsuits
that involve challenges to the reasonableness of rates contained
in a filed tariff.415 In other words, the doctrine precludes lawsuits
challenging rates that a regulatory agency required to be filed or
that would have the consequence of imposing rates other than the
filed rates.416

Because the doctrine encompasses regulated telecommunication rates, as well as the
insurance industry and rates filed with state agencies (though the Supreme Court has not ruled
on the extension of the doctrine to the latter two contexts),417 it may be implicated in bail and
telecommunications cases. In the prison communications context, a given service potentially
could be covered by a publicly filed tariff. Further, as discussed (see page 11), bail bonds are a
form of surety insurance, and some states require the insurance companies that underwrite bail
414

Reichert v. Keefe Commissary Network, No. 17-cv-5848-RBL, 2018 WL 2018452, at *2 (W.D. Wash. May 1, 2018)
(denying motions to compel arbitration; ―Al
l 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, at *4 (D. Or. Feb. 25, 2016) (denying motion to compel arbitration;
―[Pl
aintiff] 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).
415
64 AM. JUR. 2D Public Utilities § 62 (2011); Town of Norwood, Mass. v. New England Power Co., 202 F.3d 408, 416 (1st
Cir. 2000) (―
[The filed-rate doctrine] limits attacks outside the regulatory process on tariffed rates filed with . . . regulatory
agencies.‖).
416
Gonzalez, supra note 9, at 1425 n.196; see also Carlin v. DairyAmerica, Inc., 705 F.3d 856, 867 (9th Cir. 2013) (―
At its
most basic, the filed-rate doctrine provides that state law, and some federal law (e.g. antitrust law), may not be used to
invalidate a filed rate nor to assume a rate would be charged other than the rate adopted by the federal agency in
question.‖) (citation and internal quotation marks omitted); Davel Commc‘ns, Inc. v. Qwest Corp., 460 F.3d 1075, 1084 (9th
Cir. 2006) (―
[T]he doctrine bars suits challenging rates which if successful would have the effect of changing the filed tariff.‖)
(citation and internal quotation marks omitted); Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994) (―Si
mply
stated, the doctrine holds that any ‗filed rate‘—that is, one approved by the governing regulatory agency—is per se
reasonable and unassailable in judicial proceedings brought by ratepayers.‖).
417
See Mont.-Dakota Utils. Co. v. Nw. Pub. Serv. Co., 341 U.S. 246 (1951); Richardson v. Standard Guar. Ins. Co., 853
A.2d 955, 963 (N.J. Super. Ct. App. Div. 2004) (―
We, thus align our decision with the considerable weight of authority from
other jurisdictions that have applied the filed rate doctrine to ratemaking in the insurance industry.‖).

Commercialized (In)Justice
Litigation Guide

bonds (the ―
surety‖ or the ―
surety company‖) to submit a proposed maximum rate, which,
subject to the insurance commissioner‘s approval, is adopted on a company-by-company basis
and binding on the surety.418
The seminal filed-rate doctrine case is Keogh v. Chicago &
Northwest Railway Co.,419 in which the plaintiff alleged a
conspiracy to fix freight transportation rates at an unnaturally
high level and requested damages to the extent he had to pay
inflated rates as a result of the conspiracy. The Supreme Court
held that the plaintiff‘s complaint had to be dismissed because,
even assuming the conspiracy allegations were true, the rates
had been filed with and deemed reasonable by the Interstate
Commerce Commission.420

The filed-rate
doctrine may be
inapplicable
because the lawsuit
does not, in fact,
challenge rates
contained in a
filed tariff.

Two principles supporting the doctrine have emerged based on the Court‘s reasoning in
Keogh.421 The first—known as the ―
nondiscrimination strand‖—reflects the concern that
permitting individual ratepayers to attack filed rates would lead to discrimination in the rates
charged and also ―
undermine the congressional scheme of uniform rate regulation.‖422 The
second—known as the ―
nonjusticiability‖ or ―
administrative deference‖ strand—asserts that
attacks on filed rates would unnecessarily enmesh the courts, which are not institutionally wellsuited to engage in retroactive rate setting, in the rate-making process.423
With the caveat that advocates must conduct jurisdiction-specific research, advocates should
consider several possible arguments against the application of the doctrine. First, advocates
may be able to argue that the filed-rate doctrine is inapplicable because the lawsuit does not, in
fact, challenge rates contained in a filed tariff.424 At the outset, advocates should determine
whether there is a publicly filed tariff that covers the bail scheme or the relevant
telecommunications service. If not, then the doctrine should not apply.

418

See, e.g. CAL. CODE REGS. tit. 10 § 2094 (―Ev
ery bail permittee shall file with the commissioner a schedule of charges to
be made for bail.‖); id. § 2094.1 (―Nobail permittee shall issue or deliver a bail bond except at the rates most recently filed
with the commissioner . . . .‖); IOWA CODE ANN. § 515F.5 (requiring insurers not specifically exempted to file rates with the
commissioner of insurance).
419
260 U.S. 156 (1922); see also Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409 (1986) (confirming
Keogh‘s holding); see generally Vonda Mallicoat Laughlin, The Filed Rate Doctrine and the Insurance Arena, 18 CONN. INS.
L.J. 373 (2012) (discussing the origins of the filed-rate doctrine).
420
Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156, 161–62 (1922).
421
The Ninth Circuit‘s articulation of the rationales for the doctrines differs slightly. The Ninth Circuit has stated that there
are three justifications for the doctrine: (1) stabilizing rates and preventing discrimination amongst rate payers, (2) federal
preemption (or the supremacy of federal law), and (3) deference to federal agency expertise (preventing the interjection of
the courts into the rate-making process). Carlin v. DairyAmerica, Inc., 705 F.3d 856, 867–68 (9th Cir. 2013).
422
Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 19 (2d Cir. 1994) (citation and internal quotation marks omitted).
423
Id.
424
See Nw. Pub. Commc‘ns Council v. Qwest Corp., 538 Fed. Appx. 822, 824 (9th Cir. 2013) (filed-rate doctrine does not
apply when suit ―d
oes not challenge filed rates‖); Plaintiff‘s Opposition to Defendants‘ Motion to Dismiss at 24–25, In re
California Bail Bond Antitrust Litigation, No. 3:19-CV-000717-JST (N.D. Cal. Aug. 14, 2019), ECF No. 68 (―T
he filed rate
doctrine also does not apply because bail agents are not required to, and do not, seek approval from CDI or any other
agency regarding discounts offered to consumers. . . . The filed rate doctrine only applies when (assuming all other
conditions are met) the challenged practice is one that an agency has and exercises the authority to regulate.‖).

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Litigation Guide

In the telecommunications context, tariffs for any type of interstate phone service (inside or
outside of prison) are no longer required under FCC rule.425 Instead, non-dominant carriers like
inmate calling services providers 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).426 When issuing its detariffing rule, the
FCC concluded that elimination of tariffs in turn would ―
eliminat[e] the ability of carriers to invoke
427
the ‗filed-rate‘ doctrine.‖ On the other hand, some commentators have argued that the FCC
lacks the authority to abolish this judicially created rule.428 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 and thus the filed-rate doctrine should not apply.429
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 jurisdiction430
(though such efforts are not always successful431). The filed-rate doctrine should not apply to
these detariffed services.432

425

Second Report & Order, In the Matter of Policy & Rules Concerning the Interstate, Interexchange Marketplace, Dkt. No.
96-61, 11 FCC Rcd. 20730 (Oct. 31, 1996).
426
Id. ¶ 84, 11 FCC Rcd. at 20776. 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.
427
Id. ¶ 55, 11 FCC Rcd. at 20762; see also Ting v. AT&T, 319 F.3d 1126, 1139 (9th Cir. 2003) (filed-rate doctrine ―d
id not
survive detariffing‖).
428
See 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).
429
E.g., Daleure v. Kentucky, 119 F. Supp. 2d 683, 686 (W.D. Ky. 2000) (applying the filed-rate doctrine upon finding ―S
tate
and federal regulatory agencies approved all of the . . . rates‖ challenged in the complaint (emphasis added)). In contrast,
the correct result was reached, at least at the motion to dismiss stage, in Antoon v. Securus 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
providers. Id. at *6; see also Ting v. AT&T, 319 F.3d 1126, 1139 (9th Cir. 2003) (filed-rate doctrine ―
did not survive
detariffing‖).
430
See Complaint ¶¶ 47–49, Pearson v. Hodgson, No. 18-cv-11130-IT (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); see also Plaintiffs‘ Memorandum of Law in Opposition to Securus
Technologies, Inc.‘s Motion to Dismiss at 14–17, Pearson v. Hodgson, No. 18-cv-11130-IT (D. Mass. May 30, 2018), ECF
No. 35.
431
See Order Denying Withdrawal of Tariff, In re Securus Tech., Dkt. No. TF-2017-0041 (Iowa Utils. Bd., Feb. 9, 2018)
(denying Securus‘s motion to withdraw its tariff because, even though the company was no longer a ―t
elephone 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)).
432
Advocates may be able to make the related argument that the filed-rate doctrine should not apply due to the lack of
regulation. See In re Transpacific Passenger Air Transportation Antitrust Litig., 69 F. Supp. 3d 940, 961 (N.D. Cal. 2014)
(―[T
]he DOT effectively abdicated its authority over the unified air fares in 1999, and there is no evidence of any ongoing
regulation of the unified air fares thereafter. Accordingly, Defendants may not use the filed rate doctrine as a shield from civil
liability.‖), aff‟d and remanded sub nom., Wortman v. All Nippon Airways, 854 F.3d 606 (9th Cir. 2017); Plaintiffs‘
Memorandum of Law in Opposition to Securus Technologies, Inc.‘s Motion to Dismiss at 17, Pearson v. Hodgson, No. 18cv-11130-IT (D. Mass. May 30, 2018), ECF No. 35 (―Se
curus argues that it has neither a state nor federal regulator.
Therefore, there is no administrative agency to hear or resolve Plaintiff‘s claims even if the claims were about the rates
Securus charged. Accordingly, it would be appropriate for Plaintiffs‘ claims to be heard by a court of law.‖).

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Litigation Guide

Even if there is a filed tariff, advocates nonetheless may be
able to argue that the filed-rate doctrine does not apply
Even if there is a filed
because the lawsuit does not challenge the specific rates
tariff, the filed-rate
charged or the tariff does not encompass the challenged
doctrine may not apply
practice.433 In one case, the federal district court rejected the
because the lawsuit does
argument that the filed-rate doctrine barred plaintiffs‘ claim that
not challenge the specific
additional fees charged by Securus—the company with an
exclusive contract to provide inmate calling services to all
rates charged or the tariff
correctional facilities run by the Bristol County Sheriff‘s Office—
does not encompass the
to pay the Sheriff‘s Office site commissions violated
challenged practice.
Massachusetts law.434 The court concluded that the plaintiffs‘
claims were ―
independent of any challenges to the specific
rates charged,‖ explaining that ―
[n]othing about Securus‘s filed tariffs deals with the issue of
what Securus is doing with the revenue that it receives from the telephone calls, and the filedrate doctrine does not shield Securus from claims of unfair or deceptive acts relating to their use
of these funds.‖435
Advocates may be able to make similar arguments if they seek to challenge terms, agreements,
riders, or forms that never were filed with the regulator. Advocates also may be able to assert
that the doctrine does not bar claims centering on installment fees or other charges not
encompassed by filed rates.436
Second, in the bail context, advocates may be able to assert that there is no ―
filed-form‖
doctrine that would bar suit. The fact that a surety company has filed forms with the state
regulator does not mean that the filed-rate doctrine precludes challenges to those agreements
in court. In one case, the federal district court certified to the Alabama Supreme Court the
question of whether an insured could recover damages under Alabama law where the policy
expressly excluded such coverage in a form approved by the state insurance regulator.437 The
Alabama Supreme Court rejected the argument that the filed-rate doctrine barred the
counterclaims because the Department of Insurance had approved the policy language that
included the exclusion, reasoning that the case ―
is not a rate case.‖438 The Alabama Supreme
Court emphasized that the Department of Insurance‘s ―
approval of the policy language does not

433

See, e.g., Gelb v. AT&T Co., 813 F. Supp. 1022, 1023, 1030 (S.D.N.Y. 1993) (holding—in a case alleging, inter alia, a
violation of a consumer protection statute and fraud as a matter of federal common law—that there was nothing in the policy
underpinnings of the filed-rate doctrine that would cause it to protect a defendant who unlawfully exacted payment, even at
a lawful rate, and further holding that the defendant could not insulate itself from all tort claims by simply invoking the filedrate doctrine); id. at 1030 (concluding that the Supreme Court ―d
oes not view the filed rate doctrine as a bar to all tort claims
with an indirect nexus to the rate setting function of agencies‖).
434
Pearson v. Hodgson, 363 F. Supp. 3d 197, 209 (D. Mass. 2018).
435
Id.
436
See Lapenna v. Gov‘t Employees Ins. Co., No. 8:05-CV-904-T-24MSS, 2007 WL 4199580, at *2 n.3 (M.D. Fla. Nov. 26,
2007) (concluding, in case where plaintiffs argued that GEICO charged them installment fees exceeding maximum
permitted by state law, that ―th
e filed rate doctrine is inapplicable here because this dispute centers on installment fees,
which are distinct from premium rates‖), aff‟d, 316 Fed. Appx. 894 (11th Cir. 2009).
437
Peachtree Cas. Ins. Co. v. Sharpton, 768 So. 2d 368, 369 (Ala. 2000), opinion after certified question answered, No.
CIV. A. 97-D-771-N, 2001 WL 286919 (M.D. Ala. Mar. 20, 2001).
438
Id. at 372–73.

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Litigation Guide

by itself suggest that [an insurer] may issue a policy that violates‖ Alabama law.439
Third, advocates should consider arguing that the doctrine does not bar their request for the
particular type of relief alleged. For example, while a retroactive claim for money damages is
likely to fail, a court may allow a claim for injunctive relief to proceed.440
Advocates also should note that, even though the filed-rate doctrine usually is invoked
defensively, there is some possibility that they may be able to use it offensively. For instance,
when an ICS carrier‘s website includes extraordinarily exculpatory terms and conditions (see
page 54), a tariff reviewed and approved by a regulator may provide greater customer relief by
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].‖441

VI. CONCLUSION
This guide discusses how advocates can use federal and state consumer protection laws to
stop some of the widespread consumer abuses occurring in the shadows of the criminal legal
system. It suggests some specific tools, as well as starting points for additional research, that
advocates can deploy to build their consumer law claims against actors in the bail, prison retail,
and private debt collection industries.

439

Id. at 373; see also S. Farm Bureau Life Ins. Co. v. Banko, No. 8:06CV840T27EAJ, 2006 WL 2935281, at *2 (M.D. Fla.
Oct. 13, 2006) (stating that no ―fi
led form doctrine‖ under Florida law and that plaintiff failed to cite a case indicating that
―re
gulatory approval of an insurance policy form bars suits over policy language).
440
See Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 419 (1986); see also Arsberry v. Illinois, 244
F.3d 558, 563 (7th Cir. 2001) (―Ifthe 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.‖); In re Transpacific Passenger Air Transportation Antitrust Litig., 69 F. Supp. 3d
940, 946 & n.1 (N.D. Cal. 2014), aff‟d and remanded sub nom. Wortman v. All Nippon Airways, 854 F.3d 606 (9th Cir. 2017)
(filed-rate doctrine applies and bars treble damages only as to the filed rates; filed-rate doctrine does not bar claims for
injunctive relief) (citing Square D Co. v. Niagra Frontier Tariff Bureau, Inc., 476 U.S. 409, 422 n.28 (1986)); 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); Plaintiff‘s Opposition to
Defendants‘ Motion to Dismiss at 25, In re California Bail Bond Antitrust Litigation, No. 3:19-CV-000717-JST (N.D. Cal. Aug.
14, 2019), ECF No. 68.
441
Am. Tel. & Tel. Co. v. Central Ofc. Tel., 524 U.S. 214, 221–22 (1998).

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Litigation Guide

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