Lawsuit: St. Paul's Sunrise Banks accused of systemically ripping off inmates

A proposed class action suit claims the St. Paul bank is purposefully making it difficult for inmates to use their cards so the bank can load up on fees.

A proposed class action suit claims the St. Paul bank is purposefully making it difficult for inmates to use their cards so the bank can load up on fees. Giuseppe Milo

When inmates are released from a California prison, they leave with a box of their possessions, the balance of their commissary money, and $200 in "gate money" to get themselves home.

That $200 doesn't come in cash, though. It comes in the form of a prepaid card loaded with hidden fees.

So discovered Joe Rudy Reyes, who walked out of High Desert Prison in northern California with $424 on a JPay card issued by Sunrise Banks of St. Paul. Home was Los Angeles, a multi-day journey by piecemeal transportation.

After busing to Sacremento, Reyes attempted to withdraw the card's balance in cash. He was declined twice. So he bought a train ticket to Hanford, where he had family. After purchasing a bus ticket to Los Angeles, he estimated he had about $100 left on the card.

But he was unable to withdraw any more money, Reyes alleges in a proposed class action lawsuit.

The card was declined several times as he attempted to buy food, so Reyes called the customer hotline on the back of the card. Praxell, a Delaware customer service company, told him his account had been frozen for undefined "suspicious activity." He would need to send photocopies of the card and his driver's license to gain access.

It took him several weeks to get a driver's license. Praxell then asked for a copy of a utility bill in his name, which Reyes did not have as he was living in transitional housing. Praxell suggested he provide a notorized letter from his landlord instead, which Reyes obtained. Although he questioned how any of these documents would prove ownership of a card that did not have his name on it, Praxell would not explain, according to the suit.

Praxell ultimately told him he would need to contact High Desert Prison to gain access to his account. The prison couldn't help, saying it had nothing to do with inmates' private bank accounts.

A year since his release, Reyes still wasn't able to access the remaining balance on his card. When he called Praxell again in early January, an automated system told him his account had been closed.

According to the lawsuit, JPay card fees include a $1 point-of-sale or ATM decline fee, a $5 card replacement fee, a $3 monthly "maintenance fee," and a $9.95 cancellation fee, none of which is told to inmates upon their release. In other states, these cards can charge cardholders $2 weekly maintenance fees, $0.70 transaction fees, and $3 fines for inactivity after 90 days. The clock starts ticking on maintenence fees as soon as the card is activated, which could be weeks before the inmate is actually released from custody.

Inmates deported after their arrest report they're not able to use their cards abroad at all, yet they may still face a $1 decline fee each time they try.

"Defendants have engaged in a pattern and practice of freezing accounts for supposed 'fradulent activity," the lawsuit states, even though they don't explain their basis for these suspicions.

"Defendants deliberately place additional conditions on access to frozen accounts as each condition is met in a conscious attempt to delay a cardholder’s access to his or her funds. The longer the delay, the more maintenance and decline fees Defendants can extract from the account."

Sunrise Banks, JPay, and Praxell can only get away with these fees because government contracts shield them from market competition, and their customers are recently released prisoners with little financial literacy and no choice in becoming their customers in the first place, the lawsuit alleges.