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New York May Drop JPay, The Scandal-Plagued Prison Banking Company

A one-year extension could be the prison contractor’s last, ending a 15-year run.

Eli Tan   ·   October 21, 2022
The Department of Corrections and Community Supervisions Albany headquarters. | DOCCS
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The New York prison agency has quietly restructured its contract with telecom vendor JPay and is considering dropping the company altogether.

The Department of Corrections and Community Supervision (DOCCS) has contracted with JPay — one of the largest prison technology providers in the country — since 2007, and has granted the scandal-plagued company exemptions from legal caps on the fees it charges incarcerated people for services like money transfers and emails.

The department said it’s in the process of evaluating new vendors for next year’s contract and hasn’t ruled out JPay as a contender, and a company spokesperson said JPay “look[s] forward to continuing our longstanding relationship with the state.” But a source at the New York City jail agency, who spoke on the condition of anonymity, told New York Focus that “this is likely it” for JPay’s presence in both city jails and the state’s prisons once the current deal expires.

If the contract is not extended, it will be the end of a 15-year tenure that has seen JPay grow from an early stage startup to a ubiquitous aspect of the state’s correctional system, racking up allegations of price gouging and bribery along the way.

As part of a one-year extension that went into effect on August 2, DOCCS says it convinced JPay to lower fees on money transfers and “stamps” used to send emails and photos, though fees for deposits are still as high as $4.75. The deal is still expected to make JPay $1.4 million in revenue, none of which will go back to DOCCS as commission, according to the contract, the same terms as the last agreement.

A one-year extension is unusual for a prison telecom contract. Securus, the company that owns JPay, says its deals are typically three to five years long. JPay’s last two extensions with DOCCS were each for five years.

Bianca Tylek, the founder and executive director of Worth Rises, an advocacy group that focuses on profiteering in US prisons, says her organization helped DOCCS negotiate down JPay’s fees in 2019. Tylek thinks the state should move towards an in-house payment system instead of choosing a different telecom vendor.

“When you think about it, it’s just so ridiculous. The state already goes in-house for everything else. Parking tickets, license plate registrations, you don’t pay for those through some external provider that charges fees, you pay for them on the state website,” Tylek said. “And it’s not like [JPay] is offering quality services. And they’re expensive, and the state isn’t even collecting money on it. It’s just illogical.”

IT’S THE FIRST TIME JPay’s fees for money transfers are all below $5, the inmate deposit fee limit mandated by state law. JPay had previously charged as much as $11.99 for transfer fees thanks to an exception to the law granted by DOCCS each year since 2007, which JPay argued it couldn’t operate without, costing New Yorkers hundreds of thousands of dollars each year in additional fees.

JPay’s application for the exception in 2020 called its prices “within a standard range of fees charged for similar Kiosk services elsewhere.” In 2019, it called them “demonstrably affordable to both the companies and the public.”

The company told New York Focus its new prices would “make it even easier for loved ones to stay connected.”

A DOCCS spokesperson suggested the department may be looking to cut costs further. “In the coming months, DOCCS will evaluate other potential vendors, including JPay, to plot a path forward in delivering services at the lowest possible rates,” the spokesperson said.

JPay’s services are also offered in city jails through county-level contracts separate from DOCCS. The Rikers Island Central Cashier, which processes financial transactions in New York City jails, told New York Focus it makes sense for the jails to choose the same vendor as the state to make transferring funds easier.

Money transferred to an incarcerated person’s account through JPay can be used to buy commissaries like soda, instant noodles, and coffee. The Central Cashier’s office said it processes around $20,000 of JPay deposits to the 5,000 inmates of Rikers Island each day.

Wages behind bars are extremely low — at Rikers, they range from 55 cents to $1.45 an hour — but prices for commissaries are the same as they would be at a normal store. A packet of cashews off the state’s commissary list, for example, costs $3.25.

A pair of JPay machines on Rikers Island | Eli Tan

Carlos Rosario, a Bronx resident who was released from Rikers Island in October after spending three months incarcerated, says JPay’s services are ridden with glitches, and that fees are so high that many incarcerated people can’t afford them.

“The biggest complaint about JPay is that none of it works. And if it did, it’d still be too expensive for people to use,” said Rosario.

In 2016, city legislators crafted a bill that would limit inmate transfer fees to 1 percent of the total deposit, but it was never brought to a vote. JPay claimed the law would have slashed its revenues by 93 percent. Margaret Chin, the former City Council member who sponsored the bill, declined New York Focus’s request for comment.

The Fines and Fees Justice Center, an organization that works to cover the costs of prison-related fees, said costs imposed by third party vendors like JPay extend beyond incarcerated people.

“There are many different ways that the telecom industry preys on incarcerated people. And I say incarcerated people, but it’s mostly their families,” said Antonya Jeffrey, the New York director of the organization. “And there’s a clear demonstration that women bear the brunt of these fines and fees as the majority head of households. So we’re trying to support that group as much as anyone.”

Jeffrey added she was surprised to hear that DOCCS had restructured its contract without a formal announcement.

IN 2022, LEADERSHIP at JPay looks different than it did 15 years ago, as does the country’s prison tech landscape. When JPay signed its first contract with DOCCS in 2007, it was helmed by Ryan Shapiro and Errol Feldman, a pair of childhood friends from Miami fresh out of law school. Prison technology in the US was nascent but on the rise, and the company’s services were being used in just a handful of states.

Feldman left the company after it was acquired by Securus in 2017, and Shapiro is facing a five-year prison sentence for insider trading, having left JPay in 2015. But the company’s reach has never been greater — Securus estimates 1.9 million incarcerated people across 34 states are JPay customers, reporting a $363 million profit in the 2021 fiscal year, a major slice of the country’s $1.2 billion prison telecommunications industry.

JPay’s 15-year run in New York has involved considerable public controversy. In 2016, the company’s contract with the state was investigated by Attorney General Letitia James after a report in the New York Daily News alleged that Norman Seabrook, the former correction officer union leader, lobbied hard for the initial deal to be made without a bidding war by other vendors. Seabrook denied the allegations and nothing came of the investigation, allowing JPay to sign a five-year extension the following year.

Less than two years later, Seabrook was convicted of accepting a $60,000 bribe from Murray Huberfeld, an executive at the hedge fund Platinum Partners. The bribe led Seabrook to invest $20 million of the union’s pension in Huberfield’s fund, losing $19 million of it.

Huberfield is also the neighbor and longtime friend of Shapiro. In 2016, Huberfield donated $125,000 to the Miami Beach synagogue Shapiro serves on the board of, the New York Daily News reported.

In 2021, JPay was forced to pay $6 million in fines and restitution from claims brought by the Consumer Financial Protection Bureau after illegally charging fees to incarcerated people in order for them to access their own funds. JPay’s contract with the state remained intact through it all.

DOCCS declined to say which companies other than JPay it’s eyeing for a new telecom contract, or whether it plans to take a commission on fees or to go in-house like advocates have suggested.

And if JPay’s contract is not renewed?

“Good riddance,” Rosario said.

Correction: Murray Huberfeld is an executive at Platinum Partners, which has no relationship with Securus, not at Platinum Equity Partners, the financier of Securus.

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