J.P. Morgan Chase (JPM) has reportedly settled a class action that accused the banking giant of gouging former inmates with exorbitant fees on debit cards it issued them when they left prison.
In 2008, J.P. Morgan won a government contract to supply prepaid debit cards to ex-prisoners from all federal lockups in the U.S. The ex-cons could then use the cards to withdraw money they had earned or been sent while they were incarcerated.
But when the convicts were freed and tried to access their money, they found that they had to pay huge fees for what seemed like ordinary services.
The former prisoners had to pay $24.50 if they wanted to get a lost card replaced quickly; $10 to withdraw money at a teller window; and $1.50 if they didn’t use the account for a month, according to the Financial Times. They even had to pay $0.45—or the equivalent of two hours of work in prison, the FT notes—if they wanted to check their account balances.
According to Ken Grunfeld, a lawyer at the Philadelphia law firm of Golomb & Honik, which led the class action, the convicts had no chance to question the fees when they got the cards, because if they didn’t take the card they couldn’t get their money. “This was a ‘take it or leave it’ endeavor,” he told the FT.
The lead plaintiff in the case was the Philadelphia artist Jesse Krimes, who was sent to federal prison in 2009 for possession of cocaine with intent to distribute, the year after he graduated from art school. Federal agents had raided his house and found 157 grams of cocaine. After his 70-month sentence—and with $250 to his name—he saw on his first post-prison statement that he was getting hit with a rash of fees, the FT reports.
“Everything about the federal prison system is designed to grind you into hopelessness,” Krimes told the FT. “Coming home and trying to piece together a stable life, to have this very wealthy bank preying on you, was just unconscionable.”
In settling the case, J.P. Morgan agreed to pay $446,822 to reimburse former prisoners, and may pay up to $250,000 in lawyers fees for the prisoner plaintiffs. According to the FT, quoting someone with knowledge of the case, Chase has begun waving the fees.
Coins2Day has contacted J.P. Morgan Chase for comment and will update the story with any response.