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

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.