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The Prison Phone Rip-Off  

by Barbara Koeppel

Jul 5, 2021 | Politics

PHOTO CREDIT: 
Edel Rodriguez

You couldn’t make this stuff up if you tried.

When people incarcerated in U.S. prisons and jails call their parents (say, on Mother’s or Father’s Day), they pay through the nose. A 15-minute in-state call can cost $7.50 from a jail in New York and up to $18 in other states. This is especially bizarre because phone rates around the globe are minuscule to zero. For out-of-state calls, the spread can be larger—from $2.30 in Massachusetts to over $17 in Georgia. 

Ulandis Forte, who was once incarcerated, is a prisoner rights advocate who has critiqued the prison phone system for years. On a recent NPR show, he said, “When you’re in prison, it’s an enormous pressure-reliever to speak to someone who knows you and has your best interest at heart—especially when you’re in an unfriendly environment.  

“I’ve seen where not being able to communicate with the outside world has led to breakdowns, even suicides. And it isn’t fair to make children suffer because of the lack of communication, due to the phone companies’ enormous greed. We still have a huge impact on our loved ones and friends by being able to reach out.”

While the phone calls keep families connected, they are colossal cash cows for prison telephone companies, payment-processing firms, the jails and their sheriffs, and other local and state officials. The rip-off is particularly repellent since a majority of incarcerated people and their families are poor. 

A 2013 report by Prison Policy Initiative, or PPI, a nonprofit that lobbies to reform the system, says the wide range of costs is mainly due to the size of kickbacks (called commissions) that prison phone companies offer to jails and prisons in order to win the phone service contracts.

Can these kickbacks be legal? Surprisingly, yes. Some telephone history here would be helpful. Until a few decades ago, calls to and from some jails were free—as at Rikers Island jail in New York City. At others, inmates used standard pay phones. While the costs weren’t astronomical, they weren’t cheap, either; people held in these facilities had to make collect calls, which are always more expensive. Still, they were manageable.  

The scene changed when the Federal Communications Commission broke up the AT&T phone monopoly in 1984 and new phone companies sprang up almost overnight. The most ingenious ones saw gold in the prison system and jockeyed to win contracts with the thousands of jails across the country: because millions of people cycle through these facilities, millions of dollars were waiting to be made. Worse, since the facilities sign monopoly contracts with a single company, this means incarcerated people have no choice. Even today, although most people own cell phones, when someone is booked into facilities their phone is confiscated, so they’re locked into both the jail and its phone service.

Rates for out-of-state calls are regulated by the FCC, which set them about eight years ago at 21 cents a minute for prepaid calls and 25 cents for collect calls. Bianca Tylek, the executive director of Worth Rises, a nongovernmental organization that lobbies to lower the cost of prison calls and promote other reforms, says, “Although the states and FCC set caps, enforcement has always been lax.” 

This means that the phone companies’ profits from inmates have flourished. This is particularly true for Global Tel Link and Securus Technologies, which, through mergers, have cornered over 80 percent of the market. GTL’s revenues from calls and other fees (more on these later) were $654 million in 2019, and Securus’s were $683 million in 2018. The profits from those who are incarcerated are so highly prized that the private equity firm Veritas Capital and Goldman Sachs jointly bought GTL in 1999 for $345 million and, in turn, sold it to American Securities in 2011 for $1 billion. Securus is owned by Platinum Equity, headed by billionaire Tom Gores, who also owns the Detroit Pistons. That these two companies have bought up so many others means competition is next to nil. 

In a perverse negotiation process, sheriffs who run the jails award contracts to the companies that charge the highest rates and fees. Why? The companies agree to split their revenues from each call with the jail. The percentage of the commission varies, but in jails around New York State, it ranges from 40 to 86 percent: thus, on a $15 call, the company kicks back $12 to the jail. Elsewhere, as in St. Louis County, Missouri, the jail awarded its contract to ICSolutions, because that company offered the highest commission—73 percent—of all bidders. In its 2013 report, PPI points out that the same occurred with the Macomb County jail in Michigan, which awarded the contract to the company that offered a 78 percent commission.

The report notes some officials find the practice too dodgy: “In 2007, the County Commissioners of Dane County, Wisconsin voted to ban the commissions that brought in nearly $1 million per year. The County Supervisor explained, ‘We’ve lost our moral compass and direction for a million bucks a year.’” But the report also notes that, in 2009, Dane County negotiated a new contract where, instead of taking a commission, it would just take an “administrative” fee of $476,000 in monthly increments.

The sums each jail nets from the commissions are huge—although again, based on the size of the county, there’s a wide range. For example, in Michigan, the small jail in Alcona County netted a modest $4,800 in 2016, but in that same year the kickbacks to Genesee County were $233,000, and in Macomb County they were $850,000. 

How do the jails use the dollars?  Sheriffs claim they cover jail programs and the general budget. Critics say they swell the sheriffs’ and guards’ salaries.

And jails are not the only winners. According to a March 2021 PPI report, sheriffs’ associations are also rewarded. For example, GTL gives 3 percent of the revenue from each call made from a New York jail to the State Sheriffs’ Association. In return, 80 percent of county sheriffs sign their phone contracts with GTL. This kickback—which does not show up in the counties’ contracts—was documented in a 2019 exposé in the Rochester Democrat and Chronicle. 

Also, sheriffs favor companies that are corporate sponsors of the National Sheriffs’ Association. Besides GTL, which is considered a “diamond” partner, Pay-Tel Communications and the Keefe Group (the parent of ICSolutions, which handles CenturyLink’s prison phone business) are all “platinum” corporate partners. 

Moreover, the phone companies contribute generously to sheriffs’ election campaigns:  the PPI reported in 2017 that GTL and Securus donated over $70,000 to several campaigns of a sheriff in Alameda County, California, while other companies donated to campaigns in Nevada, New York, and Florida. Thus it is not surprising that sheriffs across the United States fiercely fight attempts by public interest groups and even congressional representatives to have the FCC lower rates and fees—as lower rates would depress the flow of dollars into the jails’ coffers. The prison phone corporations are equally opposed.

Other public servants have also had their hands in the till. For example, Chris Epps, Mississippi’s former commissioner of the Department of Corrections, stashed away $1.4 million in bribes from companies that sought contracts with the state’s prisons and jails—one of which was GTL. And Epps, who is serving a 20-year sentence in federal prison for bribery and filing a false income tax return, was not alone: GTL’s largesse extended to a former Mississippi state representative, a state senator, business consultants, a prison consultant, the wife of a former lawmaker, and an insurance broker. 

Nevertheless, GTL’s business continued as usual. It settled a lawsuit with Mississippi for just $2.5 million and, according to the Mississippi Clarion Ledger, “GTL admitted no wrongdoing in the settlement.” Interestingly, GTL continues to capture the contract to provide phone services to Mississippi’s facilities. 

Equally interesting is that, according to a March 2020 Mississippi Today article, Pelicia Hall, Mississippi’s former commissioner of corrections, resigned “amid increased public scrutiny over in-custody death and conditions inside the facilities.” Three months after she stepped down, GTL hired her as a senior vice president.

Beware of the fees

Since the phone companies were paying huge commissions, they had to find other ways to ramp up their revenues. The solution was in myriad fees: these were slapped on to open an inmate’s or family’s phone account, to deposit money into it, and to get a refund from it for any unspent dollars when the account was closed. Although the FCC banned many of the fees in 2014, some are still charged: for example, it costs $3 to make an automated payment (for using the phone account) and $2 to receive a paper bill. What’s key is that the phone companies don’t pay commissions on these fees. A 2019 PPI report says the fees can raise the cost of a call by as much as 40 percent. 

Despite the FCC’s attempt to cap rates and eliminate certain fees, the average cost of a 15-minute in-state call from U.S. jails across the country is $5.74. Worse, the same 15-minute call can be as high as $22 in Wisconsin and $18 in California, Oklahoma, and Kansas. For low-income families, such amounts are onerous. 

Pauline Rogers, the founder and director of Reaching and Educating for Community Hope, or RECH, a nonprofit group that offers housing and other services to women when they’re released from prisons and jails, has been calling inmates for 30 years. Concerned about the costs, she recently called GTL (the company with the Mississippi prison phone contract) to learn if people were charged a separate connection fee—with per-minute rates added on top of that—and a reconnection fee if the call is dropped (as happens frequently). Twice, she asked the question to a GTL agent, and both times the agent refused to answer. She adds that in Mississippi, it costs her $3 to $4 to deposit $20 to $25 into the prison phone account she uses for her advocacy work. 

Even if families have credit cards or bank accounts that are charged to deposit funds to their accounts, the phone companies still tack on $3 for the transaction.

The biggest fees are for single calls that incarcerated people make when their families don’t have phone accounts. The rate for these calls is $4 for the first minute and 50 cents for each additional one, plus a $3 onetime transaction fee. 

Others profiting off the prisoners are payment processing companies. The 2019 PPI report notes, “Many people living in poverty . . . often pay their bills by money transfer via Western Union or Moneygram, which charge $6 to send a payment directly to GTL, NCIC, Telmate, Paytel, or ICSolutions. These fees penalize those who can’t afford to open an account.  Further, Western Union’s charges are higher when the money is sent to prison phone companies than to other companies (which usually costs $1.50 to $3). And two companies—ICSolutions and Legacy—charge an added fee to accept the payment. Of the three companies where Western Union’s fee is relatively low, two charge another fee that erases the savings to the customer. Western Union charges customers of GTL and Securus—the prison phone market leaders—the highest rates.

Since GTL and Securus recently bought two of the largest money-transferring firms—Touch Tone and JPAY—they now have even more control of the services and fees. 

Prison versus jail phone costs

Before 2012, there were no rate caps. But that year, as mentioned earlier, the FCC limited the rates for out-of-state calls in prisons and jails at 21 and 25 cents a minute. In 2016 (during the last year of the Obama administration), the FCC proposed cutting these rates in half, to about 11 cents a minute. However, the lower rates never went into effect, and the FCC, under Donald Trump, said it would not support the reduced rates if the phone companies sued to keep them high—which is exactly what happened. In 2017, the D.C. Circuit Court ruled in favor of the companies.  

State prison phone rates have historically been lower than those in jails due to lobbying by families and public interest groups. According to those working on such reforms, it’s difficult to lobby at the local level, since each state has so many jails. Also, jail populations are far more fluid—some people only stay overnight, others for a few months awaiting trial, unable to pay the bail. Thus, lacking rate caps, the cost of local (in-state) calls from jails—which are 92 percent of all calls—are huge. 

Some cities lower costs

A few cities have outlawed the worst practices. For example, calls from New York City and San Francisco jails are now free: authorities consider them an overhead cost, just as they would electricity, heat, food, and water. 

Also, last year, Dallas County commissioners reduced the cost of calls made from jails to about 1 cent a minute; thus a 15-minute call, which was $3.60, is now 18 cents. As noted in a February 2020 KERA TV News item, “County Judge Clay Jenkins said family members of inmates shouldn’t have to choose between paying for basic necessities—like medication or bills—and talking to their loved ones.”

The Connecticut legislature recently passed a bill to make phone calls free in its jails and prisons—the first state in the country to take this action.  Massachusetts has a similar bill pending, but it won’t be voted upon until the fall legislative session. Also, the FCC recently passed a rule to lower the rates for out-of-state calls to 14 cents a minute for prisons and 16 cents for jails.

These changes are positive, hard-fought first steps (it took three years to get the bill passed in Connecticut). But the system is still stuck in the companies’ $1.4 billion boondoggle. 

Barbara Koeppel is a Washington, D.C.-based investigative reporter who covers social, economic, political, and foreign policy issues.

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