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Letter to CFPB re November 2014 study of prepaid account agreements, United States Senate, 2015

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November 3, 2015
The Honorable Richard Cordray
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
Dear Director Cordray:
We commend the Consumer Financial Protection Bureau (CFPB or Bureau) for its November
2014 study of prepaid account agreements and the protections these accounts provide, including
access to account information, overdraft services, and fee disclosure information. We write to
bring to your attention to predatory behavior in the prepaid card market that impacts a
particularly vulnerable population, formerly incarcerated people.
As the Bureau moves forward with finalizing a proposed rule to strengthen protections for
prepaid products, we urge you to take a second look at the impact of prepaid cards in the unique
prison context. Prison release cards are a critical tool for people leaving prisons to transfer their
earned wages and/or commissary account balances to a prepaid card. Any reductions to the
wages and account balances of formerly incarcerated people could harm their ability to
successfully reenter society.
Today, some firms charge high fees on prison prepaid cards that create significant barriers to
reentry for formerly incarcerated people. Most corrections agencies that report using prepaid
cards also report that fees are imposed on cardholders, including unusual fees such as weekly
maintenance fees. 1 These cards often also include forced arbitration provisions. 2 As your recent
study on arbitration showed, the rights of consumers nationwide are limited by forced arbitration
in the financial services industry.3 As another example, states receive revenue from certain
vendors chosen to provide prison release cards. Correctional facilities may also structure their
contracts with prepaid card vendors in such a way that costs are entirely passed on to formerly
incarcerated people. 4
The CFPB's 2014 study of prepaid account agreements examined 325 account agreements. Only
five, or 1.5 percent, of the agreements studied were prison release cards. 5 Additionally, according
to the Bureau of Justice Statistics, prison sentences have increased in recent decades. For
example, prison sentences imposed increased from an average of 55.1 months during 1988 to
Prison Policy Initiative, Comment to the CFPB proposed rule (March 18, 2015), available at
3 http://www.consumerfina rbitration-study-report-to-congress-2015/.
4 ment.pdf.
Consumer Financial Protection Bureau, "Study of prepaid account agreements," Nov 2014, cfpb study-of-prepaid-account-agreements.pdf



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