Company That Provides Tablets to Prisons Benefits from Lucrative Exclusive Contracts

In a recent column, I wrote about how inmates in Idaho had hacked their tablets to add digital currency to their accounts. I was surprised to learn that the inmates were using a proprietary system of software and tablets provided by a Florida company called JPay. With the proliferation of free email services and inexpensive tablets, it seemed unusual that inmates would not be using more commonly available products and software instead.

Well, there’s a good reason. JPay has scored lucrative contracts with many states to provide these services on an exclusive basis at high costs and in exchange, JPay often provides kickbacks to the institutions and the states.

The company began providing a service for wiring money to inmates from their relatives in 2002 at a cost of more than $10. They then began e-messaging services in 2004. JPay often installs their system at no cost and derives its income from the services it offers. And the cost of these services might surprise you. In the case of wire services, they can take 35 percent or more of the amount wired. For email services, JPay requires the purchase of a digital stamp to send a message, with one stamp required for each page. If you want to attach a picture, that costs another stamp. A video clip requires three stamps. Currently, the stamps cost about fifty cents. This reminds me of the cellular providers 15 years ago that charged for every little thing you wanted to do.

Inmates can avoid some of these charges by buying the company’s proprietary tablet for a few hundred dollars. The tablet, of course, only runs the company’s proprietary software.

JPay is owned by Securus, a company that also provides phone services for inmates. According to Wired, they were a part of a 2013 FCC action trying to reduce the high cost per minute charges from prisons:

Federal Communications Commission voted in 2013 to cap the costs of interstate phone calls, calling it a first step toward ending the exorbitant costs of staying in contact. Two years later, the commission extended the cap to intrastate calls. But after five prison phone providers, including Securus, filed separate petitions challenging the FCC’s decision, the ruling was overturned—leaving pricing entirely in the hands of private companies, with charges ranging from 96 cents to as much as $18 for a 20-minute call.

According to a USA Today article:

The United States incarcerates people at a rate five times higher than most countries. As the prison population has grown, so have exclusive, lucrative deals between prisons and private companies. These deals often leave prisoners’ families paying far more for services than is fair or reasonable.

In the past, prison services provider JPay has been criticized for charging exorbitant fees for electronic money transfers to prisoners. A 2014 investigative report by the Center for Public Integrity revealed the company was charging 35 to 45 percent to transfer money in some cases. It also found that families of hundreds of thousands of U.S. inmates had no way to send money to incarcerated loved ones without paying high fees to private companies including JPay.

JPay’s model seems clear. They obtain exclusive rights to basic communication services and charge a heavy premium for it. Their technology is far from the best and likely antiquated compared to today’s popular services. They give new meaning to having  a “captive audience” for their products and services.