InfoBytes Blog
CFPB studies criminal justice financial ecosystem
On January 31, the CFPB published a report studying the criminal justice financial ecosystem, which addressed financial challenges people and families face at every stage of the criminal justice process. According to Justice-Involved Individuals and the Consumer Financial Marketplace, contact with the criminal justice system is very common in the U.S. In 2019, 2.1 million adults were in jail or prison, 4.4 million were under community supervision, and 77 million adults (1 in 3) had a criminal record. These statistics, the Bureau stated, do not account for family members or friends who are often responsible for providing financial support for incarcerated individuals, and who often encounter financial impacts as a result. The Bureau reported that individuals often struggle to pay criminal justice debt and often face steep fines, including additional fees tacked on by third-party debt collectors that, if not paid, may result in incarceration. Additionally, the Bureau reported that the choice of financial service providers is limited within the criminal justice system, and that faced with little or no choice as to how to receive funds upon release from prison or jail, individuals often incur high fees to access their money and may experience difficulties resolving errors. Last October, the Bureau issued a consent order against a provider of financial services to prisons and jails, which alleged that the company engaged in unfair, deceptive, and abusive acts or practices in violation of the CFPA by charging consumers fees to access their own funds on prepaid debit cards that they were required to use (covered by InfoBytes here). The report also found that governments are increasingly shifting incarceration costs to the incarcerated individuals and their families. These costs, the Bureau said, are often sourced to private companies that inflate prices above typical market costs, and raise serious concerns about the transparency, fairness, and availability of consumer choice in markets associated with the justice system.