Bank of America Accused of Gouging Ex-Inmates with Card Fees

Attorney Richard Golomb of Philadelphia class action law firm Golomb Legalis lead counsel for a proposed class of thousands of former Arizona inmates accusing Bank of America of charging exorbitant fees to use prepaid debit cards which were issued to them upon their release. The prepaid cards were used to return money to prisoners that was confiscated during their arrest or that they earned through work programs.

The lawsuit was filed last week in a federal court in Phoenix. According to the complaint, the prisoners were given no choice about how to obtain their own money from their inmate accounts and were forced to accept the fee-laden cards. The bank is accused of preying on a vulnerable population of people who come out of incarceration without employment or sometimes even without a place to go once they have been released.

The lawsuit states that the prepaid debit cards exploit a loophole in federal regulations that protects the rights of other consumers. Under the U.S. Electronic Funds Transfer Act, companies cannot force people to receive wages on prepaid debit cards, but this does not apply to one-time payments to former inmates.

Because Bank of America owns the exclusive right to provide debit cards to Arizona inmates, they have been able to impose their own terms until now.

The former prisoners are required to pay fees that ordinary consumers would not have to pay, such as a $15 fee just to withdraw money at a bank teller window. "They get charged a fee just to walk up to a teller to find out how much money they have in their accounts," said Mr. Golomb. The fees are based on a debit card contract "that they never agreed to and never signed.”

JP Morgan Chase & Co paid nearly $450,000 to settle a similar lawsuit involving its contract with the U.S. Bureau of Prisons.

The case is Brill et al v. Bank of America, U.S. District Court, Arizona District, No 16-cv-3817.