Consumer Financial Protection Bureau reports on "Criminal Justice Financial Ecosystem"

This official press release, fully titled "CFPB Report Shows Criminal Justice Financial Ecosystem Exploits Families at Every Stage: Report Finds Products and Services Rife with Burdensome Fees and Lack of Choice," summarizes a notable new publication from the government agency tasked with safeguarding consumer financial products.  Here are excerpts from the press release, which includes a link to the CFPB's new report:

The Consumer Financial Protection Bureau (CFPB) today published a review of the financial issues facing people and families who come in contact with the criminal justice system. The report, “Justice-Involved Individuals and the Consumer Financial Marketplace,”  describes an ecosystem rife with burdensome fees and lack of choice, and where families are increasingly being forced to shoulder the costs. It walks through the financial challenges families encounter at every stage of the criminal justice process, and the ways in which providers — often for-profit private companies — are leveraging a lack of consumer choice and their own market dominance to impose hefty fees at families’ expense.

“Many incarcerated individuals and their families pay exorbitant fees for basic financial services,” said CFPB Director Rohit Chopra. “Today’s report describes how private companies undermine the ability for individuals to successfully transition from incarceration.”

Contact with the criminal justice system is extremely common in the United States. In 2019, 2.1 million adults in America were in jail or prison, another 4.4 million were under community supervision (such as probation), and 1 in 3 adults — or 77 million Americans — had a criminal record.  Those figures do not reflect the family members and friends who often provide financial support to people who have been arrested, incarcerated, or released from jail or prison, and who are also affected by shoddy financial products and services entwined in the criminal justice system. The burdens of the criminal justice system — and its financial impacts — fall most heavily on people of color, and women and people with lower incomes of all races and ethnicities.  Surveys have repeatedly found women, and specifically Black women, disproportionately shoulder the costs of staying in touch with loved ones in prison and paying court-related debt for family members, sometimes spending up to a third of their income on such costs and even forgoing basic necessities for themselves.

Today’s report examines the financial burdens that can occur from arrest to incarceration to reentry.  It shows that as soon as families come into contact with the criminal justice system, they are confronted with numerous financial challenges, and that for-profit companies are embedded throughout.  Specifically, the report raises issues about:

• Burdensome fees: Many local, state, and federal governments impose criminal justice debt on the people who interact with it in the form of fines, fees, and restitution.  The consequences of failing to pay fines and fees can be severe, forcing people to choose between making payments they may struggle to afford and risking arrest, prosecution, detention, or reincarceration.  States are also increasingly using third-party debt collectors to collect criminal justice debt.  These debt collectors can tack on additional fines and fees that, if not paid, can result in incarceration.
• Lack of consumer choice: For incarcerated people and their families, the choice of financial service providers is limited throughout the criminal justice system. In a normal functioning market, products compete on price and quality, but all too often, government contracts in the criminal justice system mean just one choice for consumers....
• Shifting financial burdens: Increasingly, governments are shifting the cost of incarceration to people who are incarcerated and their families, forcing individuals to pay for charges related to court operations, a court-appointed public defender, drug testing, prison library use, and probation supervision. People are also charged “pay-to-stay” fees for expenses related to their custody and care, like room and board, or medical copayments. When services are outsourced to private companies, the prices set by those companies are often wildly inflated over typical market costs.