January 31, 2022

CFPB: New Report Reviews Financial Issues Facing People and Families in Contact with the Criminal Justice System

Report Finds Products and Services Rife with Burdensome Fees and Lack of Choice

The Consumer Financial Protection Bureau (CFPB) today published a review of the financial issues facing people and families who come in contact with the criminal justice system. The report, “Justice-Involved Individuals and the Consumer Financial Marketplace,”  describes an ecosystem rife with burdensome fees and lack of choice, and where families are increasingly being forced to shoulder the costs. It walks through the financial challenges families encounter at every stage of the criminal justice process, and the ways in which providers – often for-profit private companies – are leveraging a lack of consumer choice and their own market dominance to impose hefty fees at families’ expense.

“Many incarcerated individuals and their families pay exorbitant fees for basic financial services,” said CFPB Director Rohit Chopra. “Today’s report describes how private companies undermine the ability for individuals to successfully transition from incarceration.”

Contact with the criminal justice system is extremely common in the United States. In 2019, 2.1 million adults in America were in jail or prison, another 4.4 million were under community supervision (such as probation), and 1 in 3 adults – or 77 million Americans – had a criminal record. Those figures do not reflect the family members and friends who often provide financial support to people who have been arrested, incarcerated, or released from jail or prison, and who are also affected by shoddy financial products and services entwined in the criminal justice system. The burdens of the criminal justice system – and its financial impacts – fall most heavily on people of color, and women and people with lower incomes of all races and ethnicities. Surveys have repeatedly found women, and specifically Black women, disproportionately shoulder the costs of staying in touch with loved ones in prison and paying court-related debt for family members, sometimes spending up to a third of their income on such costs and even forgoing basic necessities for themselves.

Today’s report examines the financial burdens that can occur from arrest to incarceration to reentry. It shows that as soon as families come into contact with the criminal justice system, they are confronted with numerous financial challenges, and that for-profit companies are embedded throughout. Specifically, the report raises issues about:

Today’s report is the CFPB’s first study of the criminal justice financial ecosystem. In 2021, the CFPB released a free printable and downloadable guide, “Focus on Reentry: Criminal Justice ,” as part of its Your Money, Your Goals financial empowerment resources. The guide is designed to help frontline staff – such as those working at nonprofits or government agencies – address the unique financial challenges of individuals involved in the criminal justice system.

In October 2021, the CFPB took action against the prison financial services company JPay for taking advantage of people transitioning out of the corrections system by charging them fees to access their own money on prepaid debit cards they were forced to use and requiring consumers to sign up for a JPay debit card as a condition of receiving government benefits.

The CFPB will continue to use all its tools and authorities – including rulemaking, supervision, enforcement, research, and consumer engagement – to promote fairness for all people in the financial marketplace.

The CFPB also invites people and families in contact with the criminal justice system to use the Bureau’s “Tell Your Story” tool to share positive or negative experiences they have had with the financial products and services.

Read the report, “Justice-Involved Individuals and the Consumer Financial Marketplace.” 

This post was originally published here.