Chase Fees Draw Ire of Former Inmates

BROOKLYN (CN) — Adding insult to injury, Chase applies various fees to the ATM cards it provides federal prisoners so that accounts are useless on the outside, a class of former inmates claims.

Lead plaintiff Brett Sheib took on JPMorgan Chase & Co. in a 32-page lawsuit filed Monday in Brooklyn Federal Court.

He says he and others released from prison face "unfair and unconscionable practices" that make it impossible to access their money once they get out of the federal prison system, "all without an iota of consent."

Sheib says inmates can earn 17 cents an hour in the hoosegow, and that they get money from friends and family that then gets placed on an inmate's card for use at the commissary, for phone calls or for other things.

But, when released, they're slapped with heavy and arbitrary fees for using that card, Sheib alleges.

"That is because JPMorgan Chase is the exclusive provider of funds disbursement services to releases — a role it won in a secretive, no-bid process through which it entered into a contract with the Federal Bureau of Prisons," the lawsuit claims.

Sheib also takes aim at the bank's levying of fees on the cards when released prisoners have no option to opt out, and the card is their only financial lifeline.

He goes on to detail how a released prisoner is given a "packet of information" that is "thrust into" their hands, which comes with a Chase debit card containing their money, he says.

Sheib, who was release from Federal Prison Camp Pensacola in May 2014, adds that the banking giant has taken in "several million dollars" in bank fees charged to those fresh out of prison.

Those fees allegedly include a $1.50 monthly charge for former inmates not using their cards, fees for them not using Chase ATMs, and a $10 charge for trying to turn the debit cards into cash at the bank. There's also a 25-cent fee if the account holder doesn't have enough money in his or her account, according to the lawsuit.

"These fees are themselves unconscionable and unusual in the banking industry," the complaint states. "No reasonable consumer would agree to them as a condition of getting access to their own funds."

He adds that the math doesn't add up: if a detainee makes 17 cents an hour, a $1.50 non-use fee amounts to 10 hours of prison labor, and a $5 ATM usage fee means 30 hours of work in the slammer.

"As releasees begin new lives outside of prison, these funds are very precious," the Floridian claims.

Sheib says he had $10.53 on his debit card when he was released from prison two years ago. He claims he was unfairly slapped around with charges because his account was under $20, a practice he claims the bank institutes to pilfer its customers.

Speaking on behalf of those released from prison, he says JPMorgan Chase does "everything it can to keep releasees locked into the debit card." It's all a design for the bank to pocket their money, according to Sheib.

"The harshness of the fee structure is designed to ensure that users will forfeit small, remaining balances to the bank because of the difficulty or impossibility of retrieving them," the lawsuit states.

The former inmate cites the research firm TowerGroup to assert that it's all part of a scheme similar to the "well-known phenomenon" in the gift-card industry, which has reportedly gotten as much as $41 billion in unused money since 2005.

Sheib seeks damages for unjust enrichment, conversion and violations of New York State and federal consumer protection laws.

A bank spokesman declined to comment on the pending litigation Tuesday.

Sheib is represented by Michael R. Reese with Reese LLP in Manhattan.

The proposed nationwide class includes anyone released from federal prison who incurred fees on a JPMorgan Chase debit card or has an unused balance under $20.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit