Filed on Friday in Los Angeles federal court, a lawsuit has accused Sunrise Banks and prepaid card company JPay of “unconscionable profiteering and self-dealing” by forcing their cards and associated fees on financially unsophisticated ex-inmates incapable of understanding what they were getting themselves into. The JPay Prepaid Mastercard Cardholder Agreement states that the card is “issued by Sunrise Banks N.A., member FDIC, pursuant to a license from MasterCard International Incorporated.” These cards come with a host of fees, including a $3 monthly maintenance fee and a $9.95 fee to cancel the card. A proposed class action has been filed accusing the companies of forcing thousands of prison inmates across the U.S. to accept high-fee debit cards to receive their own money when they are released.
Several law firms have jumped on the bandwagon to represent ex-inmates who were suckered into using high-fee JPay cards, which are often used to transfer funds to inmates as well. JPay provides money transfers to more than 70 percent of inmates in U.S. prisons, and in many cases, represents the only option for families to send money to individuals behind bars. Records show JPay has charged as much as 45 percent to administered funds transferred to inmates. In 2013, the card company processed seven million prison transactions and made more than $50 million in profits from these transactions.
A clause pertaining to fees associated with JPay exists in the service’s Legal Agreement, which was, oddly enough, last modified on December 5, 2017. The agreement constitutes as a binding consent of terms JPay and its users. However, many users likely don’t read the fine print or don’t have a clear understanding of its terms.
The fee clause states: Other than for sending money orders, which is a free Payment option, you agree to pay JPay a fee for using the JPay Service, at the rate in effect at the time you make a Payment (the “Service Fee”). All Service Fees are non-refundable. Service Fees may vary by state and correctional institution in which the inmate resides.
The agreement also specifically refers to the need for arbitration for the resolution of any dispute that arises. The Legal Agreement states: This agreement requires the use of arbitration on an individual basis to resolve disputes, rather than jury trials or class actions.
Another clause indicates: In the event JPay is unable to resolve a complaint you may have to your satisfaction (or if JPay has not been able to resolve a dispute it has with you after attempting to do so), we each agree to resolve those disputes through binding arbitration instead of in court. Arbitration is more informal than a lawsuit in court. Arbitration uses neutral arbitrators instead of a judge or jury, allows for more limited discovery than in court, and is subject to very limited review by courts. Any arbitration under this Agreement will take place on an individual basis; class arbitrations and in court class actions are not permitted.
Whether the newly proposed class action will be successful is yet to be determined.