Fee-Based Debit Cards on Inmate Funds May be Illegal

Jails and prisons cannot shift the cost of tracking the cash taken from arrestees onto the backs of those arrested without a potential violation of the Constitution’s protection against taking private property, a federal appeals court ruled Monday.

To save money, Multnomah County, Oregon, privatized its handling of cash taken from jail arrestees by allowing Numi Financial to issue debit cards when inmates are released, then changing a range of fees that quickly depleted the value of cards.

A federal appeals court reinstated the challenge of Danica Brown, who was arrested during a 2014 protest and had $30.97 in cash taken.  She was released without charges and given a Numi debit card instead of cash.

“The government of Multnomah County should not so easily be able to shift the burden of securing and returning released inmates’ funds to the released inmates themselves, many of whom, like Brown, are never charged with a crime,” wrote Judge Ronald Gould for the 9th US Circuit Court of Appeals.

Multnomah County was not charged for this but instead Numi makes its money from fees charged to released prisoners for the card. There are host of fees: $5.95 monthly fee; $2.95 for every ATM withdrawal in addition to fee by ATM itself; 95-cents for attempted transaction that is denied for insufficient funds; $1 for each ATM balance inquiry; 50-cents for contacts to customer service and others.

Former prisoners have five days to remove their balance without fees but there are a number of limits on how they can accomplish that.

Brown said she was unaware of some of the fees and ended up losing 22 percent of her $30.97, or $6.97.

She sued for violation of the Constitution’s Fifth Amendment protection against illegal taking of property, violation of the Electronic Funds Transfer Act and state law. The constitutional and EFTA claims were dismissed.

The trial judge ruled there was no “pro se taking” because the release cards were the functional equivalent of cash or check.

“The release cards are not the functional equivalent of cash or a check because the value of the cards quickly and permanently deteriorates,” the panel held. There is one other critical difference between the cards and cash: “the ticking clock,” wrote Judge Ronald Gould.

From the time Brown got the card she had five days to spend the money or recover the cash from the card. But if she had put the cash in her purse and waited six months to spend it she would still have the same amount in her purse.

Multnomah estimated it cost $275,000 a year in labor costs to track inmate cash, and its contract with Numi relieved it of any cost. But that is not the only way it is handled. Napa County, California and Broward County, Florida use a similar system but pay a flat fee to cover the card expense and do not charge prisoners.

The appeals court sent the case back to the trial court.

Case: Brown v. Stored Value Cards, Inc., No. 18-35735

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