Human Rights Defense Center
DEDICATED TO PROTECTING HUMAN RIGHTS

January 12, 2015

Submitted Online Only

The Honorable Tom Wheeler, Chairman
Federal Communications Commission
445 12th Street, S.W.
Washington, DC 20554
Re: Comment in the Matter of Rates for Inmate Calling Services,
WC Docket No. 12-375 (Second Further Notice of Proposed Rulemaking)
Dear Chairman Wheeler:
The Human Rights Defense Center (HRDC) is pleased to submit this comment in response to the
Commission’s Second Further Notice of Proposed Rulemaking (Second Further Notice) seeking
information on specific issues related to Inmate Calling Services (ICS), including permanent rate
caps for interstate and intrastate calls, site commissions and ancillary fees. 1
Prison Legal News, a project of the HRDC, has reported on issues concerning ICS providers and
prison phone rates since 1992, and has spent more than four years collecting and making publicly
available much of the ICS data relied upon by the Commission and other interested parties that
resulted in the 2013 Inmate Calling Report and Order and FNPRM (Order), 2 which established
interim per-minute ICS interstate rate caps of $0.25/minute for collect calls and $0.21/minute for
debit and prepaid calls.
Rate caps on interstate prison phone calls have not only increased ICS call volumes (Second
Further Notice ¶5), but have also made a real difference in the lives of prisoners and their family
members, as detailed in the multitude of letters filed on the docket. It is HRDC’s position that
comprehensive ICS reform includes not only permanent interstate rate caps but also permanent
caps for intrastate rates and the elimination of site commissions and ancillary fees, among other
remedial measures.

1
2

Second Further Notice of Proposed Rulemaking, Docket No. 12-375 (October 17, 2014).
See generally, Inmate Calling Report and Order and FNPRM, 28 FCC Rcd. 14107 (2013).

______________________________________________________________________________
P.O. Box 1151
Lake Worth, FL 33460
Phone: 561.360.2523 Fax: 866.735.7136
pwright@prisonlegalnews.org

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I. Historical Framework of the ICS Industry
Some ICS providers and detention facilities that have filed comments make dire predictions if
the current system of price gouging, financial exploitation of prisoners and their families, and
commissions/kickbacks paid to correctional agencies were ended and/or rate caps imposed on
phone calls made by prisoners. History and experience belie these claims, however.
The Commission should note that the practice of ICS commissions in exchange for monopoly
contracts at detention facilities began in the late 1980s and did not become widespread until
the early 1990s. Prior to that time, since at least the late 1960s, prisoners had access to phone
services that did not rely on commission-based contracts.
Speaking from personal experience, when I was first imprisoned in Washington state in 1987, I
could place a collect call to my family in Florida via a live operator on a call handled by AT&T,
and speak with them for an unlimited period of time at a cost of pennies a minute. I was able to
speak with them every day. That changed in 1992 when AT&T, in exchange for a monopoly
contract, gave the Washington Department of Corrections (DOC) a commission on ICS revenue.
The calling rates steadily increased until they became some of the highest in the country ($4.95
+ $0.89/minute for interstate calls, or $18.30 for a 15-minute call). Further, the Washington DOC
provided far more programs to prisoners when it received no ICS commissions than they do now
under a commission-based contract.
Prior to the commission model of ICS contracts, prisons and jails were perfectly capable of
providing telephone access to prisoners, as well as rehabilitative services, without phone rates
inflated by commission kickbacks. Today, some defenders of the current commission-based
status quo claim that if the kickbacks are eliminated or ICS rates are curtailed, some programs
that benefit prisoners risk being eliminated.
This claim is a red herring and a distraction from the issue of unjust phone rates. First, aside
from California, we are aware of no state that imposes any statutory limitation or restriction on
how ICS commissions are used. Nationally, such funds have been used for everything from state
and county general funds to buying guard uniforms, paying guard salaries, purchasing food for
prisoners and other basic needs that by all accounts should be paid by the state. For example, a
summary of the Inmate Welfare Fund for the Los Angeles County Sheriff’s Department indicates
the fund is used to pay for a wide variety of expenses that include institutional food, clothing,
equipment and building maintenance, office expenses, administrative services, tools and minor
equipment, and “computing mainframe.” While some IWF funds are used for educational and
recreational programs for prisoners, the majority is not. See Exhibit A.
It is pathetic when states such as Georgia claim they use their ICS commissions to provide
mental health care for prisoners, implying that if they were to lose the commission revenue they
will simply shirk or refuse to carry out their constitutional and statutory obligations to provide
appropriate medical treatment to mentally ill prisoners. Do they seriously mean that if they no
longer receive ICS commissions then the mentally ill will go untreated?

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One of the many inherent evils of the current ICS commission-based system is that it subverts
the democratic process. If prison and jail officials believe certain programs are worthwhile and
deserve to be funded, then they should go to their respective legislative bodies and request
funding for those programs, with the cost borne by all taxpayers through the legislative budget
process – not just by prisoners and their family members through contractual fiat by corrections
officials and ICS providers.
Under the current system only some taxpayers – those who wish to maintain contact with their
incarcerated loved ones – are subjected to inflated phone rates as a means of funding certain
correctional programs and services, which, as noted above, may or may not directly benefit
prisoners. In short, the Commission’s duty is to ensure “just, reasonable and fair” rates for all
consumers. What the commissions are or are not used for is immaterial to that analysis.
Consider the example of New York, which banned ICS commissions in 2007. At the time it did
away with commissions, the state Department of Correctional Services was receiving a 57.5%
commission that provided around $20 million in commission payments annually. After ending
the commissions, the phone rates at NY DOCCS facilities dropped to some of the lowest in the
nation, at $.048 per minute. Yet even without the $20 million in annual commission payments,
New York’s prison system did not stop providing educational and recreational programs that
benefit prisoners. In a July 8, 2013 letter submitted to the Commission, NY DOCCS Acting
Commissioner Anthony J. Annucci stated, “The commission revenue had been used to pay for
inmate services related to health care and family visitation. This was addressed by executive
budget increases and the elimination of some inmate services.” He concluded, “there are
significant benefits that can be attributed to lower calling rates that seem to outweigh the
operational challenges that also attach to the process.” See Exhibit B.
The ICS commission issue also illustrates the fundamental problem with the existing status quo;
specifically, the lack of competition in the ICS industry, in which local jails and 41 state prison
systems, in exchange for commission payments, provide ICS providers with monopoly phone
service contracts. Notably, few correctional agencies have foregone commissions, even though
they control the RFP process and could decline to accept such payments, absent legislative or
executive action – such as in most of the nine states that have banned commission kickbacks. 3
As these proceedings before the Commission aptly illustrate, ICS providers view the government
contracting agencies as their customers, not the hard-working taxpayers who are actually paying
the ICS bills, who are viewed as helpless victims to be financially exploited because they have
no alternative if they wish to speak with their imprisoned loved ones.
The lack of competition in the ICS industry has long been problematic. However, there is no
technical reason why correctional facilities cannot handle the security functions of an ICS system
themselves, or contract with a third party to do so, while allowing call recipients to choose their
preferred phone carrier or service. Only when consumers are afforded the choice to select telecommunications providers that offer the best service at the lowest price will a competitive and
free market prevail in the ICS industry.
3

New Jersey is the most recent state to forgo ICS commissions.

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Meanwhile, as set forth below, we urge the Commission to enact permanent, lasting reform by
imposing rate caps on all calls made by prisoners, banning commission payments to detention
facilities and banning ancillary fees so that consumers may enjoy just, reasonable and fair rates
for telephone communication with their incarcerated loved ones. The cost of ICS was reasonable
and affordable for most Americans until the early 1990s, when the commission system became
the norm. The Commission should note that of the many thousands of comments received on the
topic of ICS, the only ones that defend the existing practice of exploiting consumers are those
from the stakeholders that financially benefit from the status quo: the ICS providers and some
correctional agencies that do not want to lose their ICS commissions.

II. Comments for Second Further Notice of Proposed Rulemaking
A. Commission Payments
The Commission requests comment on prohibiting site commission payments so market-based
dynamics will result in just and reasonable ICS rates and fair compensation. (Second Further
Notice ¶¶21 and 27). HRDC opposes any action by the Commission with respect to setting a
cap or limit on ICS commissions or similar payments made by ICS providers to correctional
facilities, unless that cap or limit is zero. Should the Commission establish a cap or take other
action with respect to limiting ICS commissions, it would be placing its stamp of approval on
the commission-based model for ICS services, and site commission payments would thus be
legitimized and institutionalized.
“The record is clear that site commissions are the primary reason ICS rates are unjust and
unreasonable and ICS compensation is unfair, and that such payments have continued to increase
since our Order.” (Second Further Notice ¶21). “Moreover, where states have eliminated site
commissions, rates have fallen dramatically.” Id.
As the Commission notes, the Joint Provider Reform Proposal – discussed below in greater detail
– supports the elimination of site commissions and proposes a long list of commission payments
that would not be permitted. (Second Further Notice ¶38). The ICS providers further claim that
“The per-minute rate caps proposed above are feasible for the parties only if implemented in
conjunction with corresponding reductions in site commission payments.” 4 While it appears that
the ICS providers are trying to use reforms implemented by the Commission to assist in contract
negotiations with correctional agencies with respect to site commissions, the practice of routing
such payments through other creative methods should not be overlooked.
One example is the ICS contract between Global Tel*Link (GTL) and the Michigan DOC.
Michigan is one of nine states that have eliminated site commissions; however, the DOC created
a “Special Equipment Fund” that is funded by a per-minute increase in ICS phone rates. Thus,
absent the explicit elimination of any site commission payments or their equivalents, correctional
agencies or ICS providers will likely find a way to circumvent any lesser restrictions. HRDC
brought this practice to the Commission’s attention in a comment dated June 16, 2011.

4

Joint Provider Reform Proposal at 3.

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As a practical matter, if the Commission imposes caps on ICS rates that are low enough, there
will be an effective end to commissions, as ICS providers will not be able to provide more than
token amounts to correctional agencies. This will also have the effect of leveling the playing
field, because ICS contracts will no longer be bid based on the highest commission, as has been
the historical practice. Again, this is dependent on the Commission establishing rate caps at a
level low enough to deter or effectively eliminate site commissions.
We submit that the elimination of commission payments is the only way correctional facilities
will begin to enter into ICS contracts that provide just and reasonable phone rates for prisoners
and their families. We further submit that the rate caps proposed in the Joint Provider Reform
Proposal are not low enough to accomplish that goal – particularly considering that numerous
states currently have ICS rates lower than the proposed rate caps.
For example, the Joint Provider Reform Proposal suggests rate caps of $0.20 per minute for debit
and prepaid calls, and $0.24 per minute for collect calls – or $3.00 and $3.60 for a 15-minute
call, respectively. However, according to HRDC’s most recent state-by-state phone rate data, at
least 25 state prison systems have intrastate ICS rates below the cap proposed in the Joint
Provider Reform Proposal for collect calls, while at least 20 states have prepaid and debit rates
below the proposed cap. See Exhibit C. We use intrastate phone rates for this example because
those rates were not capped by the Commission’s September 26, 2013 Order. A number of states
also have interstate ICS rates below the current rate caps on long distance calls.
As we have noted in previous comments, setting rate caps at a level that could result in ICS rate
increases in a significant number of states (i.e., up to the amount of the cap) would be an absurd
outcome and would not result in just, reasonable and fair rates for consumers in those states. It
is self-evident that ICS providers can provide phone services in states that currently have ICS
rates below the caps in the Joint Provider Reform Proposal, and can do so profitably.
Securus issued a press release on October 31, 2014, touting the $1.3 billion the company had
paid in ICS site commissions over the last 10 years. The press release reads a bit differently than
the Joint Provider Reform Proposal, in which Securus participated. “Part of the heritage of our
business is that we calculate, bill, and collect commissions and pay those to jails, prisons, and
local, county, and state governments, said Richard A. (“Rick”) Smith, Chief Executive Officer
of Securus Technologies, Inc. And it appears, sadly, that regime may come to an end in the not
too distant future,” he added. See Exhibit D. 5
The press release goes on to state that Securus has “been a vocal advocate of maintaining
commissions and [has] spent approximately $5 million in legal fees and other costs on behalf of
our facility customers over the last decade to maintain commissions, but the FCC maintains that
it is not good public policy to have the poorest in society help to fund government operations,
even though the programs funded are worthwhile.” Id.

5

Also available online at: https://securustech.net/press-releases/-/asset_publisher/JBo9KqWeTcqo/blog/securusprovides-over-1-3-billion-in-prison-jail-and-government-funding-over-the-last-10-years.

Page | 6

Assuming an average 47.79% commission rate, as calculated by HRDC in our comment dated
December 20, 2013 (at Exhibit A, p.23), Securus received estimated gross revenue of $2.72
billion over that same ten-year period, paid for by prisoners and their family members – and
Securus is just one ICS provider. By definition, commission payments have nothing to do with
the actual cost of providing phone services, 6 and are merely legal bribes to induce correctional
agencies to provide ICS providers with lucrative monopoly contracts. Sadly, although Securus
boasts about the amount of commissions it has paid to correctional agencies, it does not mention
that all such payments came from the pockets of prisoners and their family members, who had
no other choice if they wanted to stay in contact with each other via phone calls.
B. Interstate and Intrastate ICS Rate Reform
HRDC continues to fully support the adoption of permanent rate caps and a simplified rate
structure for interstate and intrastate ICS calls. Based on existing rates in the states that have the
lowest ICS costs, we submit that a just and reasonable rate cap for interstate and intrastate calls
would be $0.05 to $0.07 per minute. This range is consistent with the intrastate rates currently in
effect in a number of states, including New Mexico (effective rates of $.043/minute for collect
and debit calls and $.039/minute for prepaid calls); New Hampshire (effective rates of $.043/
minute for collect calls and $.0586/minute for prepaid and debit calls); Rhode Island (effective
rates of $.046/minute for collect and prepaid calls and $.042/minute for debit calls); New York
($.048/minute for all types of calls); Pennsylvania ($.059/minute for all types of calls) and South
Carolina (effective rates of $.066/minute for collect calls and $.05/minute for prepaid and debit
calls) – all based on 15-minute calls.
Notably, all of those rates are for intrastate calls, which were not affected by the Commission’s
Order capping interstate ICS rates; further, in all but one of those states – Rhode Island being the
exception – preexisting interstate rates were lower than the caps imposed by the Commission.
Thus, even before the interstate rate caps went into effect, several Departments of Correction had
ICS rates well below the Commission’s caps on interstate rates and the ICS providers’ proposed
intrastate rate caps in the Joint Provider Reform Proposal.
Further, several states have reduced their intrastate ICS rates after the Commission’s September
26, 2013 Order went into effect. For example, the intrastate rates in New Jersey’s prison system
dropped to $0.19/min. in February 2014, then to $0.17/min. in March 2014 and to $0.15/min. as
of September 4, 2014. See Exhibit E. This indicates that states are capable of lowering their
intrastate rates below the ICS providers’ proposed rate cap, even after reducing their interstate
rates pursuant to the Commission’s Order. That is, the lower ICS interstate rates did not inhibit
states from also reducing their intrastate rates – in New Jersey’s case, to $0.15/minute.
Additionally, Pennsylvania recently entered into a new ICS contract with a blended per-minute
rate for all intrastate and interstate calls of $.059/minute. See Exhibit F. Other state Departments
of Correction that have lowered their intrastate ICS rates following the Commission’s September
26, 2013 Order include New Hampshire, Colorado and Vermont.

6

In its September 26, 2013 Order, the Commission found that site commissions are not a part of the cost of
providing ICS and therefore are not compensable through interstate ICS rates.

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In San Francisco, ICS rates recently dropped by 70%, yet jail security needs did not change,
infrastructure costs did not change and the “churn rate” in the jail system did not change – all
reasons that ICS providers and correctional agencies have used to justify a higher ICS rate
structure for local jails. These arguments are specious. The only thing that changed, according
to San Francisco Sheriff Ross Mirkarimi, was the commission rate – his office will take in
approximately 17% less in commissions under the new pricing structure. 7
The Joint Provider Reform Proposal suggests rate caps of $0.20/minute for debit and prepaid
ICS calls, and $0.24/minute for collect calls. 8 Although we understand that the ICS providers’
proposed rate caps reflect a merged rate to account for differences between interstate and intrastate calls, such as call volume, as indicated above some states have been able to provide ICS
at rates lower than the existing interstate rate caps and the proposed intrastate caps, even before
the Commission’s Order went into effect. Further, other states have significantly reduced their
intrastate ICS rates after the caps on interstate rates were implemented.
The proposal submitted by Pay Tel Communications, Inc. supports a tiered-rate structure, with
prison phone rates capped at $0.08/min., a cap of $0.26/minute for jails with ADP of 1 to 349,
and a cap of $0.22/minute for jails with ADP over 350. 9 HRDC, however, does not support any
type of tiered-rate structure; rather, we submit that a single unified rate structure is imperative
to ensure ICS charges are transparent for prisoners and their families and to simplify oversight
and enforcement, as was noted in the Joint Provider Reform Proposal. 10
Setting rate caps for all ICS calls at levels that are just, reasonable and fair will allow families
to stay in touch with their loved ones during critical times of incarceration without eliminating
profits for ICS providers. This was recently demonstrated during contract negotiations between
CenturyLink and the Arizona Department of Corrections (ADOC). The ADOC issued a Notice
of Request for Proposal on March 6, 2014 for a Statewide Inmate Telephone System. See Exhibit
G at 1-2. The proposal included a commission “guideline” amount of $4 million paid annually to
the ADOC under its existing contract at a commission rate of 53.7%. Id. at 3. Attachment #6 to
the RFP listed the ADOC’s ICS rates as of February 28, 2014. Id. at 4.
Exhibit G, at 5, includes the proposals from ICS bidders with respect to the RFP’s commission
requirements. Astoundingly, CenturyLink, the winning bidder, was able to offer a commission
rate of 93.9% (though not as high as the 94% rate proposed by GTL), but did not increase the
intrastate rates that Arizona families have paid for years – including $2.40 + .24/minute for a
collect interLATA call. While the company won’t profit as much as Securus, the ADOC’s prior
ICS provider, we must assume that CenturyLink is able to generate profit while paying 93.9% of
its gross revenue to the ADOC in site commissions, or they would not have bid for the contract
at that level of commission payments. Notably, the RFP specified that transaction and ancillary
fees were not allowed, which again indicates that CenturyLink is able to generate profit under
such contractual provisions, even while paying a 93.6% commission.

7

July 9, 2014 ICS Workshop Transcript at 186-187 (Alex Friedmann, HRDC Associate Director).
Joint Provider Reform Proposal at 2.
9
Pay Tel Proposal Comparison filed October 8, 2014 at 1.
10
Joint Provider Reform Proposal at 2.
8

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The critical fact about the ADOC contract is how little CenturyLink receives yet is still able to
cover its costs and generate profit. The company receives only 6.1% of gross revenue from the
phone rates in effect at ADOC facilities. Thus, the amounts that CenturyLink receives on a perminute basis include, based on a 15-minute call:
Collect
Local:
IntraLATA:
InterLATA:
Interstate:

Cost of Call
$1.84
$5.00
$6.00
$3.75

Gross Rate
$.1226/min.
$.3333/min.
$.40/min.
$.25/min.

6.1% of Gross Rate
$0.0075/min.
$0.0203/min.
$0.0244/min.
$0.0153/min.

Pre-Paid/Debit
Local:
IntraLATA:
InterLATA:
Interstate:

Cost of Call
$1.60
$4.60
$5.60
$3.15

Gross Rate
$.1066/min.
$.3066/min.
$.3733/min.
$.21/min.

6.1% of Gross Rate
$0.0065/min.
$0.0187/min.
$0.0228/min.
$0.0128/min.

It is evident that CenturyLink can receive, after commissions, less than $0.03/minute for all types
of calls – intrastate or interstate, collect, debit or prepaid – and still make a profit.
Similarly, according to allegations in a class-action lawsuit filed against Global Tel*Link in New
Jersey, GTL and its subsidiary, DSI-ITI, “purchase their minutes for calls terminating within the
United States for less than 3/10 of a penny per-minute, and ... often resell the minutes it buys at
more than 100 times their cost to Plaintiffs and other Class Members.” See Exhibit H, ¶23.
One other issue that the Commission needs to address is flat-rate calls, whereby prisoners or their
families are charged a flat rate regardless of duration of the call. As indicated by other comments
in the record, some ICS providers are charging the maximum allowable amount for interstate
calls in the form of a flat rate ($3.75 for collect and $3.15 for prepaid/debit calls). This practice is
contrary to the intent of the Commission’s Order, as the rates only fall within the rate caps when
a full 15-minute call is actually completed. Calls can be cut short for a myriad of reasons: the call
is accepted but the intended recipient isn’t available, a head count or other action is required in
the correctional facility that results in early termination of the call, or calls are simply dropped,
which happens frequently. The full flat-rate charge must be paid a second time if another call is
placed after an initial call is ended prematurely.
If a prisoner calls and it takes less than a minute for the call to be answered and the prisoner to
learn the intended recipient is not available, that one-minute call will still cost $3.75 for collect
and $3.15 for prepaid/debit calls. The effective rates of calls shorter than 15 minutes in duration
are, for example, $0.75/min. (collect) and $0.63/min. (prepaid/debit) for a five-minute call and
$0.375/min. (collect) and $0.315/min. for a ten-minute call. This practice does not reflect the
spirit of the Commission’s September 26, 2013 Order, and is a way to circumvent the rate caps
and increase revenue for ICS providers.
It should be noted that the states that have banned commissions have prisons of many different
sizes. The Nebraska Department of Correctional Services operates ten facilities which range in

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size from the 180-bed Community Corrections Center in Omaha to the Nebraska State Penitentiary with an ADP of 1,091. Intrastate phone rates for the entire state prison system in Nebraska
include $0.70 + .05/min. for collect calls and $0.50 + .05/min. for debit and prepaid calls.
New York, which eliminated commissions and has a flat rate of $.048 per minute for all types of
calls, has state prisons ranging from the 90-bed Rochester Correctional Facility to the 2,898-bed
Clinton Correctional Facility. See Exhibit I. Clearly, the notion that the cost of providing ICS
services varies depending on the size of the facility is not supported by the evidence in prison
systems that have eliminated commissions. The same is true for local jails. 11
Accordingly, HRDC advocates for a non-tiered rate cap in the range of $0.05-$0.07 per minute
for all types of ICS calls. This range is not only just, reasonable and fair based on the ICS rates
currently in effect in multiple state DOCs, but also provides more-than-reasonable compensation
for ICS providers, given the example cited above for Arizona which indicates that actual costs to
ICS providers are lower than $0.03/minute, inclusive of their profit margin.
C. Reforms to Ancillary Charges
Comprehensive ICS reform must include reforms to ancillary charges, which have increased
since implementation of the Commission’s September 26, 2013 Order.12 “I hope it’s clear that
unless the FCC addresses the issue of fees, we’re wasting a lot of everybody’s time because
without addressing the fees, you’re never going to be able to bring real relief to the families that
are paying these bills,” stated Vincent Townsend, President of Pay Tel Communications, Inc., at
the Commission’s July 2014 workshop. 13 Which is a striking, truthful statement made by an ICS
provider that profits from those fees. A handout detailing the highest ancillary fees charged by
ICS providers, distributed by Mr. Townsend at the July 2014 workshop, noted that four of six
payment processing fees had increased since the Order went into effect. See Exhibit J.
HRDC does not support any ancillary fees for ICS accounts. The problem is that ICS providers
consider their customers to be the correctional facilities; they do not consider prisoners or their
families to be their customers. Telecoms do not charge non-incarcerated customers a fee for the
privilege of paying their bill, yet prisoners and their families are charged excessive fees to fund
pre-paid ICS accounts, which is simply paying the bill before the charges are incurred.
In 2011, Verizon proposed charging a $2.00 fee for some types of customer payments. The
company’s justification was that “Customers have a number of alternatives to pay their bill and
not incur the convenience fee,” and “Paying the fee is an option, not an absolute.” Verizon
backed down “hours after the FCC said it would investigate the charges....” See Exhibit K.
The Commission should note that the existence of and increase in ICS ancillary fees is fairly
recent, and is merely a means for ICS providers to boost their profits and make up for revenue
lost in paying site commissions. Critical in this analysis is the fact that commissions are only
paid to detention facilities based on call-generated revenue, not on the ancillary fees which the
11

July 9, 2014 ICS Workshop Transcript at 184-186 (Alex Friedmann, HRDC Associate Director).
July 9, 2014 ICS Workshop Transcript at 169 (Lee G. Petro, Counsel to Petitioners).
13
July 9, 2014 ICS Workshop Transcript at 136 (Vincent Townsend, President, Pay Tel Communications, Inc.).
12

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companies pocket for themselves. According to the handout distributed by Mr. Townsend at the
Commission’s July 9, 2014 workshop, up to 60% of the money paid by consumers of prison and
jail phone calls is spent on ancillary charges imposed by ICS providers rather than on the calls
themselves. See Exhibit J (revenue available for calls only $40 of $100 paid).
The unjust nature of ancillary fees is aptly illustrated by the fact that they appear to be unique
in the telecom industry. Outside the ICS context, which consumers who have any choice in the
telecom service they patronize are being charged up to 26 different fees by telecom providers?
The only two reasons ICS providers impose these fees on consumers are because they enrich
their coffers and because they have a captive market where they have monopolized the means
of communication and left consumers with no choice or other option if they wish to maintain
contact with an imprisoned loved one.

III. HRDC Response to Joint Provider Reform Proposal
The Commission also seeks comment on the Joint Provider Reform Proposal submitted by
Global Tel*Link, Securus and Telmate (Second Further Notice ¶92).
While HRDC is pleased to see the proposed elimination of 19 fees in the Joint Provider Reform
Proposal, 14 we note that consumers may well not have even been aware they were paying those
many and varied fees. HRDC’s position is that all ancillary fees must be cost-based, as well as
just, reasonable and fair, and that ICS providers should have the burden of producing evidence
to demonstrate that their fees meet this standard. Additionally, we submit that any ancillary fees
need to be minimized to prevent ICS providers from effectively increasing ICS per-minute rates
through the adoption of additional or higher fees.
A. Transaction or Deposit Fees
The $7.95 per-transaction or deposit fee proposed by the ICS providers is actually higher than
the fee charged by Global Tel*Link15 or Access Corrections. The proposed transaction fee is
exorbitant and serves to gouge prisoners’ families. A $7.95 charge for a $25 deposit represents a
fee of 31.8%; the same fee for a $100 deposit amounts to less than 8%. Yet the same transaction
is being performed regardless of the amount of the deposit. Absent evidence that the proposed
$7.95 per-transaction fee is cost-based, just and reasonable, it should be rejected.
Additionally, HRDC objects to the ICS providers’ proposal to implement a three-year time limit
for a cap on transaction fees. It is important to note that transaction fees are not calculated in
gross revenue when determining site commission payments; transaction fees have no impact on
state or local budgets – they only affect the bottom lines of ICS providers. There is absolutely no
justification to require prisoners’ families to subsidize profits for ICS providers for any period
of transition time, let alone three years. Comparably, there have been no time limits or monetary
caps on transaction fees over the time period they have been imposed, when consumers had to
pay whatever fees were charged by ICS providers to add funds to their ICS accounts.
14

Attachment to Joint Provider Reform Proposal.
HRDC Comment for WC Docket 12-375, September 18, 2014 at 2 (Global Tel*Link charges a flat $6.95 fee for
credit card payments).
15

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B. Money Transfer Fees
The Joint Provider Reform Proposal states that in addition to the fees prisoners’ families must
pay to place money on their phone accounts, “ICS providers would be permitted to impose money
transfer fees to cover the administrative costs of handling such transactions.” 16 The proposal then
suggests a maximum of $2.50 for administrative fees with no explanation as to how that amount
was calculated and whether it is just or reasonable.
The ICS providers should be required to justify the proposed fee by disclosing the actual costs
incurred to process a money transfer payment. Further, a $2.50 fee added to the amount charged
by third-party money transmitters (up to $11.95, according to Western Union’s website) may
result in excessive fees charged to prisoners’ families simply to add money to their account.
C. Validation Fee
The ICS providers’ purported “validation fee” should be assumed to be part of the calling rates
and included in the rate cap. Otherwise, as noted above, this ancillary fee serves to effectively
inflate ICS rates beyond the rate caps. A maximum 8% validation fee per call – and there is no
reason to assume that ICS providers would not charge the maximum fee – would mean that the
proposed rate cap of $0.24/minute for collect calls and $0.20/minute for prepaid and debit calls
would actually be $0.26/minute for the former and $0.216/minute for the latter.
Further, there is no indication from the ICS providers as to how the amount of this proposed fee
was reached, and therefore whether it is just and reasonable.
Indeed, it is unclear exactly what the validation fee is for and why it is necessary when, until
now, no validation fee has been charged. No telecom service provider charges a validation fee
outside the prison context, and the ICS providers have not justified the need for such a fee.
D. Convenience or Premium Option Fees
While the ICS providers devote more than a page of their Joint Provider Reform Proposal to
address fees for convenience or premium options, they do not suggest what those fees should
be, 17 and more information (including cost data) is needed regarding such fees.
With respect to ICS providers fully informing customers of all payment methods available,
HRDC objects to the proposed language that they “may” provide such information on their
websites in web-posted rates, terms and conditions, or orally or in other printed materials. 18
Disclosure of all ICS-related fees must be posted on each ICS provider’s website in a manner
that allows consumers to easily access the fee information. This will help eliminate the lack
of transparency that ICS providers have enjoyed for decades with respect to ancillary fees.

16

Joint Provider Reform Proposal at 5.
Ibid. at 6.
18
Ibid. at 6, fn 16.
17

Page | 12

E. Single Call/Single Payment Services
It is imperative that the Commission completely eliminate allowable fees for single call/single
payment services. These services are not distinctly different from collect ICS and do not warrant
separate pricing. The Commission asks if these services are “effectively an end run around the
Commission’s rate caps,” and the answer is yes. As noted in the Second Further Notice, the
record reflects that these services have been estimated to account for 40 percent of provider
revenues (Second Further Notice ¶98). The importance of this revenue to the ICS providers is
reflected in their proposal to cap these costs at existing levels (as high as $14.99 billed to a credit
card or $9.99 billed to a cell phone) for 3 years. 19 No cost data is provided to support the need to
continue these excessive charges, merely the self-serving statement that the fee “reflects that ICS
providers incur additional costs....” Id.
F. Additional Ways to Promote Competition
As stated previously, a critical means to foster competition is to separate the security functions
of ICS systems from the calls themselves, and allow consumers to choose the telecom carrier
they prefer to use to accept detention facility calls. The security functions can be provided by the
facilities at a fixed cost. If ICS providers had to compete for consumer business from the people
who actually pay the bills, they would most likely provide better service and lower prices.
G. Existing Contracts
Existing ICS contracts contain provisions to allow for amendments due to changes in the law or
new regulations. As was seen when the Commission imposed rate caps on interstate ICS calls,
the ICS providers and their prison and jail clients were able to adjust their existing contracts with
relative ease. It is worth noting that all the ICS providers and all the prisons and jails contracting
with them have attorneys on staff, or the resources to retain counsel, to redraft contracts in the
event any are not self-executing to accommodate changes in the law or regulations.
H. Transition Periods
The Commission requests comments concerning transition periods; specifically, whether 90 days
after the effective date of the order is an appropriate period to comply with all new requirements
including any rate caps, elimination of per-call charges and changes in ancillary fees for existing
contracts. (Second Further Notice ¶130). HRDC supports a 90-day transition period for rate caps
and the elimination of per-call charges and ancillary fees. We know the rates can be adjusted in
90 days, because that was done with the interstate rate caps. And while we reject the rate caps
proposed in the Joint Provider Reform Proposal as being too high, the ICS providers propose that
those caps become “effective 90 days after the adoption of a final order.” (Second Further Notice
¶15). Per-call charges and ancillary fees can also be eliminated within a 90-day period.
With respect to site commissions, the Commission requests comment on a two-year transition
period, or at least one state or state subdivision budget cycle to transition from site commission
19

Joint Provider Proposal at 6.

Page | 13

payments to allow facilities and states time to adjust (Second Further Notice ¶131). This is far
too long to require one small group of consumers, namely prisoners and their families, who are
mostly poor, to continue to subsidize state and local governments. The Commission reports that
in 2013, “ICS users and their families, friends and lawyers spent over $460 million to pay for
programs ranging from inmate welfare to roads to correctional facilities’ staff salaries to the state
or county’s general budget,” and then notes, “This estimate may be low.” (Second Further Notice
¶23). The Commission further reports “the record and data from the Mandatory Data Collection
suggest that these payments represented just 0.3 percent of prison facilities total budgets in
2012.” Id. Requiring prisoners and their families, friends and attorneys to pay $460 million per
year for a two-year period to allow the government to adjust for a revenue loss of 3/10 of one
percent of their corrections budget is not just, reasonable or fair in any context.
Thus, HRDC proposes the same 90-day period for phasing out ICS commissions. The amount of
money in relation to government budgets is miniscule, while the sums are huge for prisoners and
their families. For example, the annual budget for the Florida DOC is $2.1 billion, and the DOC
receives around $5.3 million in ICS commissions – or .25% of the agency’s total budget.
Some of the largest ICS providers, GTL and Securus for example, are owned by hedge funds.
The burden of continuing this unjust system of financial exploitation even a day longer than
necessary should not be borne on the backs of the poor people who pay the phone bills. HRDC
has reported extensively on detention facility budget issues, and prison and jail officials have
known since at least 2003 that the Commission may take action on ICS rates. Also, since the
2013 Order was issued, all correctional agencies were on notice that there may be changes to
site commissions received from ICS providers, giving them ample time to prepare for extremely
modest budget reductions. Moreover, government budget managers are experienced at dealing
with revenue shortfalls whether due to changes in tax income, economic recessions, natural
disasters, etc. Put another way, what would corrections officials do if prisoners simply stopped
using the telephones and the ICS commissions dried up?
The time is long past for the shameful and exploitive practice of price gouging consumers for
using ICS services to end. A 90-day transition period is more than adequate. When the United
States ended slavery in 1865, slave owners were not provided a “transition period” to adjust to
having to purchase labor from free people, or to deal with their loss of revenue.

IV. Miscellaneous Matters
A. Accessible Inmate Calling Services
HRDC endorses and adopts the comments previously filed by Helping Education to Advance the
Rights of the Deaf (HEARD) on WC Docket No. 12-375, relative to ICS reforms for deaf and
hard of hearing prisoners and those with whom they communicate. Specifically, we endorse and
adopt HEARD’s comments related to the provision of videophones, captioned telephones, TTYs
and other auxiliary aids for prisoners who are deaf and hard of hearing, and the need to ensure
that ICS rates charged for such accommodations do not exceed the rates charged for non-deaf or
hard of hearing prisoners. Additionally, all other aspects of this comment apply equally to ICS
reforms for prisoners who are deaf and hard of hearing.

Page | 14

B. Immigration Detention Facilities
HRDC endorses and adopts the January 10, 2015 joint comment filed by New Jersey Advocates
for Immigrant Detainees and New York University School of Law Immigrant Rights Clinic on
WC Docket No. 12-375, with respect to the necessity for ICS reforms for immigrant detainees.
All other aspects of this comment apply equally to immigration detention facilities.
C. Video Visitation Services
With respect to video visitation services, the Prison Policy Initiative (PPI) cautions that there is
“clear evidence that the video communications market is currently driven by the same perverse
incentives that caused market failure in the correctional telephone industry.” (PPI comment on
Docket No. 12-375, December 20, 2013). 20 Examples include two recent attempts by Securus to
require correctional facilities to eliminate in-person visitation as a condition for providing video
visits. Securus failed in its attempt to eliminate all in-person visitation in Dallas County, Texas,
but was successful in Multnomah County, Oregon. See Exhibit L.
While HRDC views the regulation of video visitation as a critical issue that must be addressed
before it goes too far down the same road that led us to this proceeding, we submit there is not
enough evidence in the record to come to meaningful conclusions about what needs to be done.
Human contact in the form of in-person visits has an even more significant effect than telephone
calls, not only on recidivism but on prisoner behavior, and cannot be eliminated in the name of
profit. We believe that the Commission has jurisdiction to regulate video visitation services but
should do so in a separate proceeding based on a developed record.
D. Periodic Reviews
Periodic reviews by the Commission to evaluate how ICS reforms impact phone rates, ancillary
fees and competition in the industry are essential to ensure that the reforms create and maintain
the proper incentives to drive ICS rates to competitive levels. We need look no further than the
extensive record in this proceeding to justify such reviews.
E. Enforcement
HRDC acknowledges that the Commission lacks the staff and resources to ensure compliance by
ICS providers, other than reviewing the providers’ self-reported monitoring data. Therefore, we
encourage the Commission to investigate all consumer complaints related to ICS services and to
impose fines on ICS providers that fail to comply with the Commission’s directives.
Further, the Commission should consider revoking the licenses of ICS providers that repeatedly
violate ICS reforms related to rate caps, site commission payments and ancillary fees. Lastly, the
Commission can consider advising Congress that a statutory private cause of action is needed so
that consumers can seek relief through litigation when they are harmed by illegal practices by
20

Also see, “Video Visitation: How Private Companies Push for Visits by Video and Families Pay the Price,”
Grassroots Leadership and Texas Criminal Justice Coalition (October 2014), available at:
http://grassrootsleadership.org/sites/default/files/uploads/Video%20Visitation%20(web).pdf

Page | 15

telecom providers. Currently, the filed rate doctrine precludes most legal challenges to abuses
committed by ICS providers.

V. Conclusion
In conclusion, the Commission should note that while ICS providers understandably focus on the
commission-based model for prison phone contracts and services, other options are available to
correctional agencies.
The Iowa Department of Corrections, for example, provides debit-only ICS calls through the
Iowa Communications Network (ICN), a state agency, in conjunction with ICSolutions under a
fixed monthly lease for “all aspects of the systems and services provided to the ICN....”
Previously, the Maine Department of Corrections provided its own prison phone services
through the state’s Office of Information Technology.
And in December 2013, Santa Clara County, California eliminated the ICS provider for the
county’s juvenile detention center, with a population of approximately 125. The phone service
at the facility is now provided through the county and costs around $1,650 per month, which is
paid from the county’s general fund. The calls are free to juveniles and certain security features
are included in the phone system. 21
HRDC would like to thank the Commission for taking action to end the abusive practices of
ICS providers and their government partners in the corrections industry. Reform is long overdue
and consumers have waited far too long for fundamental justice. We appreciate the difficulty and
complexity of the issues at hand, but our position can be easily summarized as follows: Cap the
cost of all ICS calls at a rate between $0.05 and $0.07 per minute; ban all site commissions and
similar payments to government agencies related to ICS services; ban all ancillary fees related to
ICS services except for the state, federal and local taxes imposed on all telecom customers; and
lastly, implement these reforms within 90 days of issuance of the Commission’s order.
If members of the Commission or their staff have questions or require additional information or
data, please do not hesitate to contact me.
Sincerely,

Paul Wright
Executive Director, HRDC
Attachments

21

Phone conversation with Robert De Jesus, Santa Clara County, September 23, 2014.

EXHIBIT LIST

A

Los Angeles County Sheriff’s Inmate Welfare Fund Statement

B

Letter from NY DOCS Acting Commission Anthony J. Annucci, July 8, 2013

C

Intrastate ICS Rates, Revised (2013-2014)

D

Securus Press Release, October 31, 2014

E

New Jersey DOC ICS Rates Effective September 4, 2014

F

Pennsylvania DOC ICS Rates (Current)

G

Arizona DOC RFP and CenturyLink Contract Documents

H

Complaint in James v. Global Tel*Link, U.S.D.C. (D. N.J.), Case No. 2:13-cv-04989

I

List of New York State Prisons with Bed Capacities

J

Pay Tel Handout on ICS Ancillary Charges

K

NPR Article on Verizon’s Plan to Charge $2.00 Fee, December 20, 2011

L

Articles on Securus Video Visitation Contracts in Texas and Oregon

EXHIBIT A

SHERIFF
LHROY D. GAGA SHERIFF
INMATE WELFARE FUND - 86630
~Y

n

N ~IT

FY 1.12
Actual

VIC
p i
A rfcuitural
Gtothfn end P@rsonal u (fe8
Communications
Food
MoUSehoid Ex enSB
Insurance
Ju end Witness Ex enae
Maintenance -E u( men!
Maintenance-Bld s & Im rov
Medlcat Dental Lab Su Itas
Membershl s
Miscellaneous Ex nse
Office Ex ense
Administrative Services
Professional Services
Technical5arvices

D

0

5 980
254 876
128 978
9 300 000
125 887

250 000
300 000
11 204 000
35B 000

P`/ 13-14
Ado ted
Bud et

Total Services 8~ Su Iles ~

b88 830

377 000

6 082 328
16 881
q8
228
308 978
948 001
293 772
8 328 838

4 329 000
20 000
1 U~0
0
473 000
1 009 000
1 000 OOU
25 103 D00

4329000
20000
1 o0U
0
q73000
1 009 000
7 000000
28103000

121 727

300 000

561 237
881 263
33 348

450 DDO
5495 000
50 000
-"

1B78U
121 470
280 BB&
0
83 043

20000
110 Q00
1 b0 000
15 000
100 Q00
15.006

27102 238

61 120 000

O7HE~CHARGES._~v_~_,_~__~.

FY 13-14
Final Ado ted
Bud et

FY 12-13
YTD Ex
as of 7125!13

p

0

0

0

7 141
188 T27
138 347
8 239 X68
98 531

7 141
201 153
1A1 061
8 401 H75
105 319

320 288

58q 607

LL ~ 7141
48 847
158 940
2 BD2 125
249 68i
0
0
213 607

FY 92.73
Est Actual/
Committed

Chatt e From
Ad usted
Allowance

30 000
270 000
200 000
10 258 000
150 QQO
0
0
~ B21 000

30 000
270 000
200 000
10 258 000
1S0 000
D
0
821 000

5 526 DOD
40 D00
1 Doo
0
350 q00
1 259 000
650 000
13 000 D00

5 528 000
40 000
~ 7 o0D
0
35D,000
9,259,OtlD
S60,OQD
17,000,000
0
200 000

p
p
340000
200 000
0
0
D
0
450000
570 000
5 495000
895 OOp
__ 50,pD0 _.__ _.._, 80 f100
-~
p
p
0
0
20000
20D00
110000
110000
~~150 000
~
30a Opp
15 000
5 000
100 000
50 OUO
1b,000
1 700 000
---`
p'
p

4 025 892 ~ ~4 852 516
35 705
35 705
2892
432 241
f 270 354
245 065
7 943 268
S1 111

623 516
15 705
7 ood
5892
5 682
~ ~ B17 523
3q4 523
1 27U 354i 261 354
289 i10
_{710 890
8 731 259
(16.379,741)
p
81 981
(218,,019)

0

0

d
570 tl00
885 OOD
56 000
~
~
20 000
11 D 000
300 000
5 Od0
50,D00
6,734,000
p

0
482 728
A 989,320
27 411
0
0
15 817
19 027
282 768
~ 11 822
1~0 d00
5 583 012
0

708 138
483 588
21 72

932 728
525680
22 589

88
9Q 510
377189
3178

Q T 83
BD 673
412 768
3 178

4 807 138

5 BOB 012

6 120000

36 9S8 400

46 389 Otl0

29 642 085

33 Z2S 407

17 894 S93

0

8

0

0

0

0

~'

TotelOtherCha es

0

AST

0
0
2fi0 000
3UQ OOD
11 204000
355060
0
0
371 000

Publications & Le al Notices
_
Rants &!.eases-E u( ment
Contracted Pro ram Services
Rents &Leases-Bid 81m rov
Sma(fools & Minor E ui men!
S eclat de arlment Ex ense
Trans oAation &Travel
UUtities
58S Ex enditure Distribution
Trainin
Com utin Persona)
TetacommunicaUone
Com ud •Midran efDe arlmental S stems
Information Teehnolo Services
Com utln Ma(nframe
Services E Su Ifes

0

~

A flcullural and Landsca in E ui ment
Atrcraftand Af ort E ui ment
7elecommunicaUons E ut men!
Constructfon/Hea Maintenance E u(
Da a Handlin E ui men!
Electronic E ui men!
Com uters Midran e/De arimental
F d Pre aratian E ut ment
M8China E of meet
Manufactured or Prefabr(cated Shuctures
Medical - Ca ilal E ut ment
Medical - Ma or Moveable E ui ment
Medical - Minor E ui men!
Non•Medical lahoreto /TesUn E ul
Office Fumlture Fixtures and E ui ment
Park/RecreaUon E of ment
Tanks - Stora e end Trans ort
Veh(cles and Trans oNatlon E ui _~
Com utera Meintrama
WaieroraRNesseiJBaraeslTuAS
All Other Undefined Assets
Dairy E4Utpment
TelecommunicaUOns InsiallaUon
Ocher E ui men!Insteiletion
Total Capital Assets

FY 7Z-73
Ad usted
Allowance

'---- --- _ _.

Totat Salaries and Em !o ee Benefits

T

FY 12.73
Ado ted
Bud et

~

TH F A C
Q eratl~ Trensters Out
Total Other Fittancin Use

,~

-~~'~
7 45B _
65S 000
0
120 000

180 230
~ 17 535
23 100
274 519
9 450

205 000

123 333

_
20 000
_

_0
0
855000
0
12000o
0
0
D
2Q8000
0
d
D
0
0
0
p
0
0
o
D
20 000
0
0
p

635 626

1000 000

1000000

2686 000

1S 188 OUO

15188000

2888 00

16186 000

618 000
a -

FY I3 AC Speetd Furcla SuppkmanWl CAangen_01.22-03
Inmate WWIeR_7(OZ

7 OI Z

0- 0
0
0
858000
655 000
0
D
t20000
120 0~0
0
0
0
0
0
0
205 OOD
205 OOD
0
0
~ 0
0
0
D
0
D
p
0
0
0
p
p
0
0
0
0
0
D
0
0
20 000
2d Ob0
0
0
0
6
p '"—"'"'~
p
00 0

u

132 519 --

57 834

5 719
32 418
47 95U

~
31 885
F --

ta2 619 --p
57.834. __.... 587 386
~
o
120 000
p
5 719
5 719
~ 32416
32 416
327 682
122 892
p
p
85 399
65 389
p
p
p
p
q
31 685
31 888
p
~--p
20 000
p
p
Q

1 QO 0 D

175 4Q5

653 26&

3A6 735

1S 530 000

15 530 000

5 SA3 292

5,5A3 292

9624 708

16 830 OD

78 630 004

B 8A3 282

8 B43 292

9 624 708

7f2°2013,8'28 RM

EXHIBIT B

STATE OF NEW YORK

DEPARTMENT OF CORRECTIONS
AND COMMUNITY SUPERVISION
THE HARRIMAN STATE CAMPUS- BUILDING 2
ANDREW M. CUOMO
GOVERNOR

1220WASHINGTON AVENUE
ALBANY, N.Y. 12226-2050

ANTHONY J. ANNUCCI
ACTING COMMISSIONER

July 8, 2013

Mr. Gregory V. Haledjian
Attorney-Advisor
Pricing Policy Division -Wireless Competition Bureau
Federal Communications Commission
445 121h Street SW
Washington, DC 20554
Dear Mr. Haledjian:
The New York State Department of Corrections and Community Supervision (DOCCS)
welcomes the opportunity to contribute to the Federal Communications Commission's
. Workshop on Reforming Rates for Inmate Calling Services. The Department has
considerable experience within this area and offers the following information for the
Commission's consideration .
In 2007 DOCCS eliminated its commissions on inmate calls. Prior to that, DOCCS
received a 57 .5 percent commission on every completed call. The cost of the call
included a connection fee ($1.28 per call) and a per-minute charge ($.16 per minute),
resulting in an average 20 minute call costing the family $4.48.i These fees became the
source of acrimony between the Department and inmate advocacy groups and the
focus of a class action lawsuit against the Department and the State of New York.
Amidst heavy scrutiny by the offender advocacy groups regarding the cost of inmate
calling, in 2007 the Department worked closely with the Governor and Legislature to
pass an inmate calling bill (NY Correction Law 623) that requires the per/minute cost of
a call to be the preeminent focus of our inmate phone contract. The statute indicates
that 'The department shall not accept or receive revenue in excess of its reasonable
operating cost for establishing and administering such telephone system services. " The
statute further requires that the "department {can} establish rules and regulations or
departmental procedures to ensure that any inmate phone call system established by
this section provides reasonable security measures to preserve the safety and security
of each correctional facility, all staff and all persons outside a facility who may receive
inmate phone calls. "

Mr. Gregory V. Haledjian
·
Page 2
July 8, 2013

These provisions of the statute prohibit the Department from collecting commissions
from the system , but they do allow the Department to roll its administrative and security
expenses (call listening and investigations for example) into the cost of the call.
Although the Department is not at present attaching these operational costs to the perminute price of the call, it may add them in the future .
Today the cost of a 20-minute call for an inmate in DOCCS is $.96. The call rate
includes a flat $.048 per minute charge, for both local and long distance calls , with no
connection fee.ii
The impact of the rate change has been significant. The number of completed calls has
risen steadily from 5.4 million in 2006 , to what we are projecting to be over 14 million in
2013 . It should be noted that this increase appears to have stabilized. Interestingly, the
average call duration remains at 20 minutes (see endnote i below).
Operationally, the Department has experienced both benefits and challenges from this
approach . The elimination of the commission created an immediate $20 million annual
revenue short-fall in the Department's operating budget that had to be addressed . The
commission revenue had been used to pay for inmate services related to health care
and family visitation. This was addressed by executive budget increases and the
elimination of some inmate services.
Clearly, lower phone rates have made call ing a more attractive option for inmates as the
numbers previously provided indicate. However, it has also made control of the phones
a strategic option for gangs and unauthorized groups working inside DOCCS facilities
who have sought to extort other inmates by attempting to control' access to the phones.
This requires vigilant monitoring by DOCCS intelligence staff and at times, intervention
by DOCCS security staff.
Lower call rates have had benefits for the inmate population. The Department believes
that its low calling rates have helped contribute to family reunification, and at less than a
nickel per minute , the Call Home Program is among the most cost-effective family
reunification options that we offer. Lower rates have also contributed to an improved
relationship between the Department and the offender advocacy groups.
The Department believes that a lower calling rate has also contributed to a lower rate of
illicit cell phone use by inmates in N~w York. In 2012 , the Department confiscated less
than 100 cell phones , compared to over ten thousand annual seizures in comparablysized correcti.onal systems.111

Mr. Gregory V. Haledjian
Page 3
July 8, 2013

In conclusion , the Department's experience indicates that inmate calling rates can be
reduced substantially if states eliminate their commissions on the calls , and structure
competitive bidding processes that ensure that the cost of the call is among the primary
attributes of their inmate calling contracts . Moreover, there are significant benefits that
can be attributed to lower calling rates that seem to outweigh the operational challenges
that also attach to the process .
Thank you for providing the Department with the opportunity to contribute to your
Workshop and we look forward to seeing the results of your process .

i 20 minutes is the average length of a call completed on the DOCCS system . This was
true in 2006 and is still true in 2013.

International calling is done under a separate system, per minute rates are higher and
are based upon long distance calling rates under a separate state contract. International
calling is less than 1 percent of DOCCS inmate call volume.

ii

iii Phone rates are a contributing factor, but so too are good security measures for both
visitation and perimeter security, adequate training and compensation for line staff, and
a zero tolerance policy that does not allow anyone to possess a cell phone inside a New
York State prison.

EXHIBIT C

             Intrastate ICS Rates, REVISED
State
AL
AK
AZ
AR
CA
CO
CT
DE
FL
GA
HI
ID
IL
IN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
TX
UT
VT
VA
WA
WV
WI
WY
BOP

Company
Embarq (CenturyLink) *
Securus
CenturyLink
GTL
GTL
VAC (GTL)
Securus
GTL
T‐NETIX (Securus)
GTL
Hawaiian Telcom
PCS (GTL)
Securus
PCS (GTL)
ICSolutions and ICN
Embarq (CenturyLink) *
Securus
Securus
PCS (GTL)
GTL
GTL
PCS (GTL)
GTL
GTL
Securus
Telmate
PCS (GTL)
CenturyLink *
ICSolutions
GTL
Securus
Unisys Corp.
GTL
Evercom (Securus)
GTL
VAC (GTL)
Telmate
Securus
GTL
GTL
VAC (GTL)
GTL
Embarq (CenturyLink) +
VAC (GTL)
PCS (GTL)
GTL
VAC (GTL)
GTL
Embarq (CenturyLink) +
ICSolutions
Sprint

Collect

InterLATA Rates (2013‐2014)
Pre‐Paid

$.25/min.
3.75 flat
2.40 + .24/min.
3.12 + .12/min.
.135/min.
1.50 + .15/min.
.3245/min.
1.55 + .11/min.
1.20 + .06/min.
2.00 + .0‐.19/min.
1.45 + .09‐.14/min.
3.80 flat
3.55 flat
.24/min.
N/A
.18/min.
1.50 + .20/min.
2.15 + .15‐.21/min.
1.55 + .25/min.
.95 + .30/min.
.86 + .10/min.
.20/min.
3.00 + .23/min.
2.10 + .24/min.
1.00 + .05/min.
.24 + .12/min.
.70 + .05/min.
1.00 + .13/min.
.50 + .01/min.
.15/min.
.65 flat
.048/min.
3.40 flat
2.40 + .24/min.
1.04 + .322/min.
3.00 flat
.16/min.
.059/min.
.70 flat
.99 flat
3.15 flat
1.853 + .116/min.
.26/min.
2.80 + .12/min.
1.074 + .133/min.
2.25 + .25/min.
3.50 flat
.85 + .20/min.
.12/min.
1.17 + .17/min.
?

$.25/min.
3.15 flat
2.00 + .24/min.
3.12 + .12/min.
.135/min.
1.25 + .11/min.
.2433/min.
1.55 + .11/min.
1.02 + .06/min.
1.80 + .0‐.17/min.
?
3.60 flat
3.55 flat
.24/min.
N/A
.18/min.
1.50 + .20/min.
1.93 + .14‐.19/min.
1.55 + .25/min.
.30/min.
.86 + .10/min.
.20/min.
N/A
2.10 + .24/min.
.05/min.
.24 + .12/min.
.50 + .05/min.
1.00 + .13/min.
.20 + .045/min.
.15/min.
.59 flat
.048/min.
3.40 flat
2.40 + .24/min.
.832 + .257/min.
3.00 flat
.16/min.
.059/min.
.70 flat
.75 flat
1.35 + .09/min.
1.667 + .105/min.
.26/min.
2.80 + .12/min.
.855 + .086/min.
1.75 + .23/min.
3.15 flat
.75 + .18/min.
.12/min.
.98 + .14/min.
?

Source:  Prison Legal News research data 2013‐2014
* ICS provided by CenturyLink, with prepaid accounts provided by ICSolutions
+ ICS provided by CenturyLink, with prepaid accounts provided by Securus
Bolded states have currently banned ICS commissions

Debit

$.25/min.
3.15 flat
2.00 + .24/min.
3.12 + .12/min.
N/A
1.25 + .10/min.
.3245/min.
1.55 + .11/min.
1.20 + .06/min.
N/A
?
3.40 flat
N/A
.24/min.
3.15 flat
.17/min.
1.20 + .16/min.
1.93 + .14‐.19/min.
.30/min.
.30/min.
.65 + .075/min.
.18/min.
.32/min.
2.10 + .24/min.
.05/min.
.24 + .12/min.
.50 + .05/min.
1.00 + .13/min.
.20 + .045/min.
.15/min.
.65 flat
.048/min.
3.06 flat
.34/min.
.832 + .257/min.
N/A
.16/min.
.059/min.
.63 flat
.75 flat
1.35 + .09/min.
1.667 + .105/min.
.234/min.
2.25 + .10/min.
.428 + .086/min.
1.75 + .23/min.
3.15 flat
N/A
N/A
.50 + .05/min.
?

Cost of 15‐Minute Call
Collect
Pre‐Paid
Debit
$3.75
3.75
6.00
4.92
2.03
3.75
4.87
3.20
2.10
2.00‐4.85
2.80‐3.55
3.80
3.55
3.60
N/A
2.70
4.50
4.40‐5.30
5.30
5.45
2.36
3.00
6.45
5.70
1.75
2.04
1.45
2.95
0.65
2.25
0.65
0.72
3.40
6.06
5.87
3.00
2.40
0.89
0.70
0.99
3.15
3.60
3.90
4.60
3.07
6.00
3.50
3.85
1.80
3.72
?

$3.75
3.15
5.60
4.92
2.03
2.90
3.65
3.20
1.92
1.80‐4.35
?
3.60
3.55
3.60
N/A
2.70
4.50
4.03‐4.78
5.30
4.50
2.36
3.00
N/A
5.70
0.75
2.04
1.25
2.95
0.88
2.25
0.59
0.72
3.40
6.06
4.69
3.00
2.40
0.89
0.70
0.75
2.70
3.24
3.90
4.60
2.15
5.20
3.15
3.45
1.80
3.08
?

$3.75
3.15
5.60
4.92
N/A
2.75
4.87
3.20
2.10
N/A
?
3.40
N/A
3.60
3.15
2.55
3.60
4.03‐4.78
4.50
4.50
1.78
2.70
4.80
5.70
0.75
2.04
1.25
2.95
0.88
2.25
0.65
0.72
3.06
5.10
4.69
N/A
2.40
0.89
0.63
0.75
2.70
3.24
3.51
3.75
1.72
5.20
3.15
N/A
N/A
1.25
?

1

2

3
4
5

6
7

8

Intrastate ICS Rates, Revised – Footnotes
1

Reflects rates that went into effect on October 1, 2014 based on an order entered by
the Alabama Public Service Commission in Docket 15957. The rate for prepaid and
debit calls only “shall be reduced to $0.23/min beginning on the first anniversary of
implementation and to $0.21/min on the second anniversary of implementation.”

2

Rates are for intrastate intraLATA calls; although the ICS contract includes separate
rates for interLATA calls, Delaware has only one LATA.

3

Rates are based on a 2011 email from the Hawaii Department of Public Safety, which
confirmed on November 20, 2013 that those rates are still in effect.

4

Illinois’ ICS contract changed to Securus in late 2012; the chart reflects 2013 rates.

5

Iowa only allows debit calls. The Iowa DOC’s phone service is provided through the
Iowa Communications Network (ICN), a state government agency, and a contract
with ICSolutions under a fixed monthly lease for “all aspects of the systems and
services provided to the ICN....”

6

Rates as of November 11, 2014; debit rate drops to $.25/minute after 31 minutes.

7

Maryland’s ICS contract changed to GTL in early 2013; the chart reflects 2013 rates.

8

In North Dakota, the rates are $.30 for the first minute then $.24/min. thereafter for
collect and prepaid intrastate calls (plus the connection/per-call charge).

Note: ICS rates and providers may have changed since this data was compiled by Prison
Legal News in 2013-2014. Data was obtained from DOC ICS contracts, DOC websites and
the Securus rate calculator (https://www.securustech.net/web/securus/call-rate-calculator).

EXHIBIT D

EXHIBIT E

DEPARTMENT OF THE TREASURY
DIVISION OF PURCHASE AND PROPERTY
PROCUREMENT BUREAU

CHRIS CHRISTIE
Governor
KIM GUADAGNO
Lt. Governor

PO BOX 230
TRENTON, NJ 08625-0230

ANDREW P. SIDAMON-ERISTOFF
State Treasurer
JIGNASA DESAI-MCCLEARY
Director

Amendment #: 12
T-1934
Solicitation #: 05-x-32533
Contract #: 61618

TO:

Department of Corrections & Juvenile Justice Commission

DATE:

September 02, 2014

FROM:

Jawad Karamali, IT Specialist

SUBJECT:

Inmate/Resident Telephone Control Services

CONTRACT PERIOD:

April 01, 2005 – December 03, 2014

Please be advised that the above referenced contract has been extended for a period of three (3)
months, commencing on September 04, 2014 and expiring on December 03, 2014. The contracted
price for service will also decrease during this period. The rate for interstate and intrastate calls will
decrease from $0.17 to $0.15 per minute.
All other terms and conditions remain the same.
Please retain this amendment with your Notice of Award for future reference.

New Jersey Is an Equal Opportunity Employer • Printed on Recycled and Recyclable Paper

EXHIBIT F

EXHIBIT G

Inmate Telephone System (IPS) Evaluation Summary and Scoring
Solicitation No. ADOC14-00003887 / ADC No. 14-066-24
CRITERION 1 –
Commission Rate
Commission Rate:

Available
Points

1500

SCALE
Calculated at the rate of 15
points for every percentage
of commission. (For
example: 60.0 %
commission rate = 60.0 X 15
= 900 points).

CRITERION 1
Total Available Points:
CRITERION 2 – Technical
Requirements

Introduction/IPS Components
2.4.3

Personal Identification Numbers
(PINs) 2.4.4
General System Management
Requirements 2.4.5

Restrictions, Fraud Control

CenturyLink Public Communications,
Inc.
Points: 1408.50
Commission rate: 93.90%

Global Tel*Link Corporation

Securus Technologies, Inc

Telmate

Points: 1410
Commission rate: 94%

Points: 1249.50
Commission rate: 83.30%

Points: 1080
Commission rate: 72.00%

Total
Points: 1408.50

Total
Points: 1410

Total
Points: 1249.50

Total
Points: 1080

Points: 12 Exceeds Requirements
S = being able to handle all calls
simultaneously. Has the ability to
shutdown a specific facility or yard at
specified time 2.4.3.20. ICER program
detects inmate to inmate calling.

Points: 12 Exceeds Requirements
S = being able to handle all calls
simultaneously. Has the ability to
shutdown a specific facility or yard at
specified time 2.4.3.20. Caller IQ program
detects inmate to inmate calling. The
system allows inmate family to unblock
numbers previously blocked 2.4.3.24.

Points: 12 Exceeds Requirements
S = Provides secondary database and an
off-site tape backup, effectively creating a
third redundancy location. 3 way calling
tested by an independent party. Being able
to handle all calls simultaneously.
THREADS investigative tool is good.

Points: 15 Significantly Exceeds
Requirements
S= Live operators review every flagged
“3-Way Suspected” call to ensure
accuracy and eliminate false positives.
Reports are issued on relevant calls
drastically reducing staff resources. 100%
simultaneously call usage. Telmate
Investigator included. Provides secondary
database and an off-site tape backup,
effectively creating six redundancy
locations. Has the ability to import voice
bio-metric from hand held recorders.

Points: 6 Meets Requirements
Continuous voice bio-metric is available
and at a reduced commission rate.

Points: 6 Meets Requirements
S = Basic voice bio-metric is included.
Continuous voice bio-metric is available
and at an additional cost.

Points: 8 Exceeds Requirements
S = Basic voice bio-metric is included.
Continuous voice bio-metric Investigator
Pro is available and is included.

Points: 8 Exceeds Requirements
S = Continuous voice bio-metric is
included. Ability to update staff and
vendor voice bio-metric.

Points: 3 Meets Requirements
S = HTTPS a secured website can access
anywhere with login.

Points: 3 Meets Requirements
S = HTTPS a secured website can access
anywhere with login.

Points: 3 Meets Requirements
S = HTTPS a secured website can access
anywhere with login.

Points: 3 Meets Requirements
S = HTTPS a secured website can access
anywhere with login.

Points: 4 Exceeds Requirements
S= three options were given for possible

Points: 3 Meets Requirements
S = IQ technology available with strong

Points: 5 Significantly Exceeds
Requirements

Points: 5 Significantly Exceeds
Requirements

Available
Points

15

3

9

15

2

6

10

1

3

5

1

3

5

10

5

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 1 of 28 PageID: 1
EXHIBIT H
James E. Cecchi
Lindsey H. Taylor
CARELLA, BYRNE, CECCHI,
OLSTEIN, BRODY & AGNELLO
5 Becker Farm Road
Roseland, New Jersey 07068
(973) 994-1700

James A. Plaisted
Lin C. Solomon
WALDER, HAYDEN & BROGAN, P.A.
5 Becker Farm Road
Roseland, New Jersey 07068
(973) 992-5300

Attorneys for Plaintiffs
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
BOBBIE JAMES, CRYSTAL GIBSON, BETTY
KING, BARBARA SKLADANY, MARK
SKLADANY, MILAN SKLADANY, and DR.
JOHN F. CROW, on behalf of themselves and all
others similarly situated,

Civil Action No.:

COMPLAINT and
DEMAND FOR JURY TRIAL

Plaintiffs
v.
GLOBAL TEL*LINK CORPORATION,
INMATE TELEPHONE SERVICE, and DSI-ITI
LLC,
Defendants.

Plaintiffs Bobbie James, Crystal Gibson, Betty King, Barbara Skladany, Mark Skladany,
Milan Skladany, and Dr. John F. Crow by way of Complaint against Defendants Global
Tel*Link Corporation, Inmate Telephone Service, and DSI-ITI, LLC, say:
NATURE OF THE ACTION
1.

This is a consumer class action for violations of federal law and New Jersey state

law arising from (a) Defendants’ abuse of their monopoly power over phone calls made from
New Jersey by prisoners by charging rates, more than 100 times higher than market rates; (b)
Defendant’s abusive, discriminatory and unreasonable phone charges whereby Defendants

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 2 of 28 PageID: 2

permit New Jersey prisoners to make collect calls but only to family, friends and lawyers who
open credit/debit accounts and who customarily are required to make substantial advance
payments to Defendants from which charges of as much as 20% of the deposit are siphoned off
at opening and again at closing of the accounts as “administrative costs”; (c) Defendants’ failure
to fully and adequately disclose to their customers charges that they will incur in connection with
their use of Defendants’ telephone service and the rates that will be charged for calls made using
Defendant telephone service; (d) Defendants’ failure to disclose to their customers certain
practices followed by Defendants in connection with their telephone service that adversely affect
their customers’ accounts; (e) Defendants’ practices of forfeiting balances in accounts when the
account is not used for 90 days after that Defendants require that the accounts be opened with
minimum payments of $25, $50 or $100.
2.

Defendants’ wrongful conduct involves relatively small amounts of damages for

each class member and Defendants are carrying out a scheme to deliberately cheat large numbers
of consumers out of individually small sums of money. Plaintiffs bring this action in their own
right and on behalf of all other persons similarly situated.
JURISDICTION AND VENUE
3.

Jurisdiction is proper in this Court by 28 U.S.C. 1332(d) because the amount in

controversy exceeds $5 million, exclusive of interest and costs, and at least one class member is
a citizen of a state other than that of a defendant. Jurisdiction is also proper in this Court
pursuant to 28 U.S.C. § 1331 because this matter involves federal questions whether there are
violations of 47 U.S.C. § 201 et seq. and 42 U.S.C. § 1983 and the Court has supplemental
jurisdiction over Plaintiffs’ state law claims because they arise from a common nucleus of

2

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 3 of 28 PageID: 3

operative facts and are such that Plaintiffs ordinarily would expect to try them in one judicial
proceeding.
5.

Venue is proper in this judicial district pursuant to 28 U.S.C. §1391(b) in that all

Defendants transact substantial business within, and are subject to personal jurisdiction, in this
judicial District and thus “reside” in this District and because a substantial part of the events
giving rise to the claims asserted herein took place in this judicial District.
PARTIES
6.

Plaintiff Bobbie James is, and at the times relevant to the claims alleged herein

was, a citizen of the State of New Jersey and resides in Newark, New Jersey.
7.

Plaintiff Crystal Gibson is, and at the times relevant to the claims alleged herein

was, a citizen of the State of New Jersey and resides in Newark, New Jersey.
8.

Betty King is, and at the times relevant to the claims alleged herein was, a citizen

of the State of New Jersey and resides in East Orange, New Jersey.
9.

Plaintiff Barbara Skladany is, and at all times relevant to the claims alleged herein

was, a citizen of the State of New York, residing in New York, New York.
10.

Plaintiff Mark Skladany is, and at the times relevant to the claims alleged herein

was, a citizen of the State of New Jersey and was housed in New Jersey correctional facilities, in
the Somerset County Jail during the period approximately September 2010 to September 2012
and then thereafter in the New Jersey State Prison at Yardville, New Jersey.
11.

Plaintiff Milan Skladany is, and at all times relevant to the claims alleged herein

was, a resident in the State of New Jersey until approximately 2011 when he returned to the
Slovak Republic where he is a citizen.

3

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 4 of 28 PageID: 4

12.

Plaintiff Dr. John F. Crow is, and at all times relevant to the claims alleged herein

was, a citizen of the State of New York, residing in New York, New York.
13.

As used herein, “Plaintiffs” shall mean and refer to all Plaintiffs identified in ¶6 to

¶12, together.
14.

Defendant GTL is, and at all times relevant hereto was, a privately held Delaware

corporation with it principal place of business located in Mobile, Alabama.
15.

Defendant ITS is a wholly owned subsidiary of GTL and a Delaware corporation

with its principal place of business in Mobile, Alabama.
16.

Defendant DSI-ITI is a Delaware limited liability company and, upon information

and belief, is the successor-in-interest to ITS. Upon information and belief, GTL is the sole
owner and member of DSI, and DSI-ITI assumed all of ITS’ existing contracts as of June 10,
2010.
12.

Defendants provide managed telecommunications services at state and local

correctional facilities in New Jersey and elsewhere in the United States so inmates can
communicate with family members, friends, attorneys and other approved persons outside the
correctional facilities.
DEFENDANTS’ UNFAIR, UNCONSCIONABLE AND DECEPTIVE
BUSINESS PRACTICES
13.

AT&T bid and won a New Jersey contract in 2002 to provide all

telecommunications services to inmates in the State of New Jersey’s correctional facilities.
14.

AT&T sold the New Jersey contract rights to be the sole telecommunications

provider for New Jersey inmates to GTL in 2002.
15.

Plaintiffs presently do not have information with respect to the arrangements

between GTL, ITS and/or DSI-ITI as to which entity customers purportedly deal with and which

4

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 5 of 28 PageID: 5

entity purportedly provides what service to customers. However, regardless of which entity does
what, GTL, ITS and DSI-ITI have operated as a single economic unit with respect to the
telephone services described herein.
16.

Defendants have the sole right to provide telecommunications services which

enable incarcerated persons to communicate by telephone with family members, friends and
other persons outside certain New Jersey state and county prison and detainee facilities.
17.

Defendants remit to the State approximately 40% of the rates charged for the right

to have a monopoly over phone services at certain State prisons and detainee facilities.
18.

Defendants ITS and DSI-ITI remit 50% or more to Essex, Monmouth, Bergen,

Hudson, among other counties, for the rights to have a monopoly over phone services provided
by those county prisons and detainee facilities.
19.

According to publicly available information, the State of New Jersey alone

receives $4.42 million per year as its percentage of revenue pursuant to its contract with GTL.
Based upon that figure, upon information and belief, the percentages paid to the various counties
should be greater. Further, this information would indicate that Defendants’ total revenue from
calls placed from New Jersey detention facilities would be in tens of millions of dollars per year.
20.

Defendant GTL has used the existing contract with the State of New Jersey as a

basis for its subsidiary ITS and DSI-ITI to enter similar agreements with many County prison
facilities such as Essex, Hudson, Monmouth and Bergen Counties among others.
21.

As a result of the foregoing contracts, since 2002, Defendants have been the sole

telecommunications provider for persons held in certain New Jersey State prison or detention
facilities to communicate by telephone with family members, friends and other persons.

5

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 6 of 28 PageID: 6

22.

Because of the exclusive provider position and the literally captive market,

Defendants are able to exploit customers by charging them unconscionably excessive rates for
calls, as well as unconscionable and undisclosed fees and connection charges, without regard to
what other providers of prepaid calling services are charging in the marketplace.
23.

Upon information and belief, Defendants purchase their minutes for calls

terminating within the United States for less than 3/10 of a penny per-minute, and Defendants
often resell the minutes it buys at more than 100 times their cost to Plaintiffs and other Class
Members.
24.

The market rate for competitively priced prepaid calling cards is approximately

1¢ to 2¢ per minute for calls within the United States. Depending upon the country being called,
the rates for international calls can be as low as 1¢ per minute. Defendants, however, charge
approximately 30¢ per minute for calls within the United States. Defendants likewise charge
exorbitant rates for international calls.
25.

The vast majority of Defendants’ customers establish their accounts over the

phone. When a prisoner wishes to call someone outside the detention facility, they must place a
collect call to that person. However, rather than an operator asking the called person whether
they will accept the charges for the call, a series of prompts routes the called person whereby the
called person is informed they must set up an account with Defendants in order to accept the call.
The same automated procedures are followed when customers seek to open an account by calling
the Defendants’ 800 number provided at the prison facility to customers.
26.

Using standardized scripts and prompts, the Defendants’ system sets up an

account for the customer or called person using a credit or debit card provided by the customer.
These accounts must be set up in amounts of $25, $50, or $100. After the account is set up, the

6

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 7 of 28 PageID: 7

called person is then provided with a PIN so he or she may accept calls from the prisoner in the
future and charges for all calls are deducted from the called persons’ account.
27.

Customers are told by Defendants that no information on rates and charges are

available until they have an account number.
28.

Customers of Defendants are not provided a written contract when they establish

an advance pay account with Defendants by telephone, nor are they advised of any of the terms
and conditions applicable to their account.
29.

Defendants do not issue account statements in writing or electronically to

customers in the ordinary course of business. When making or receiving a call, the customer is
given a voice prompt advising the customer how much money is left in their account, but a
customer cannot obtain an itemized statement of charges to their account, nor can the customer
determine how many minutes of calling time they have left because Defendants do not disclose
rates and applicable charges.
30.

Defendants fail to inform their customers that they will be charged a service or

set-up fee which will be deducted from their advance pay balance, when an account is first
established.
31.

Defendants charges an unconscionable service fee of approximately 20% of the

deposit, i.e. $4.75 out of the first $25.00 deposit, $9.50 out of the first $50.00 deposit, and $19.00
out of the first $100.00 deposit, when an account is first established, and whenever an account is
recharged. In essence, Defendants charge their customers for the ability to pay for Defendants’
services.

7

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 8 of 28 PageID: 8

32.

Defendants fail to inform their customers when an account is first established that

they will be charged fees (a per-call transaction or connection fee) for each call placed in
addition to the call rates per minute.
33.

Defendants charge upwards of $1.75 per call as a connection or transaction fee.

34.

Defendants charge a $5.00 fee to close an account and obtain a refund of any

remaining balance. However, Defendants fail to inform their customers when an account is first
established that they will be charged this additional service fee to close the account.
35.

Defendants fail to inform their customers when an account is first established that

their account balances will be forfeited if they do not use Defendants’ service for a 90-day
period.
36.

Defendants fail to inform their customers when an account is first established that

a monthly inactivity fee will be charged against their account for any months when it is not used.
37.

Because customers must purchase calling time in multiples of $25, $50, or $100

and must establish an account in advance of paying for calls, it is inevitable that customers will
not use the exact amount of money in their account. As a result, every customer will incur either
the $5.00 fee to close their account or will forfeit their account as a result of it being inactive for
90 days.
38.

Defendants also fail to advise customers that the customers’ account may be

frozen if Defendants deem the amount remaining in the account to be too little to accept calls
from an inmate. In order to unfreeze the account so he or she can receive calls, the customer
must recharge his or her account, while incurring service charges of 20% of the amount
deposited in doing so.

8

Case 2:13-cv-04989-WJM-MF Document 1 Filed 08/20/13 Page 9 of 28 PageID: 9

PLAINTIFFS’ EXPERIENCE WITH DEFENDANT
39.

Each of the Plaintiffs set up their accounts in accordance with the procedures set

forth above. Defendants did not disclose to any of the Plaintiffs the rates applicable to their
calls, nor did they disclose any of the fees and other charges applicable to their accounts, as
described above.
40.

Plaintiff Bobbie James became a customer of Defendants in approximately April

2011 in order to communicate with her grandson in Essex County Jail. She had helped raise and
support her grandson prior to his incarceration and established the advance pay account with
GTL in order to continue to communicate with him.
41.

Ms. James often deposited $25 into her accounts which permitted her to speak

with one of her grandsons approximately three times a week approximately 15 minutes total
calling time. The remainder of the $25 deposit is eaten up by fees and charges.
42.

Plaintiff Crystal Gibson became a customer of GTL in approximately September

of 2010 when her significant other was incarcerated in the Essex County Jail in New Jersey.
43.

Defendants charged Ms. Gibson a cancellation or closure fee in order for her to

get a refund of the balance in her account.
44.

Defendants also charged Ms. Gibson an inactivity fee of approximately $1.49 per

month when her account was not used.
45.

Defendants’ representative told Ms. Gibson that Defendants were charging her an

extra and additional fee for establishing an account because she used a live operator and did not
follow the scripted automated system when she first set up her account.

9

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46.

Betty King is a senior citizen who opened an account with Defendants to receive

phone calls from her brother who is an inmate at the East Jersey State Prison in Rahway,
Middlesex County, New Jersey.
47.

Mrs. King has never spoken with a representative of Defendants but has signed up

as a customer through Defendants automated phone system.
48.

From at least 2002 Mrs. King has deposited hundreds of dollars into her account

and her brother calls her regularly.
49.

Mrs. King normally deposits either $25 or $50 into the Defendants account.

50.

Defendants have never provided Mrs. King with any statement of her account.

51.

Defendants have never informed Mrs. King of the fees, rates and other charges

which are imposed on her for using the prepaid service.
52.

Plaintiff Barbara Skladany became a customer of GTL in or about 2010, when she

established an advance pay account with GTL in order to communicate by telephone with her
son, Mark Skladany, who was incarcerated in the Somerset County Jail. During the period of
Mark’s incarceration, Barbara Skladany has made deposits of many hundreds of dollars into her
accounts with Defendants.
53.

Plaintiff Milan Skladany, who was then a resident of Somerset County, became a

customer of GTL in and around 2010 when he established an advance pay account with GTL in
order to communicate with his son, Mark Skladany, who was incarcerated in the Somerset
County Jail.
54.

Plaintiff Mark Skladany deposited money in a pay phone account from his

resources available while he was in prison to fund advance pay accounts for him to make calls
from prison to his parents, lawyers, relatives and friends.

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55.

During that time, Ms. Skladany has had to pay service fees to open and recharge

her account and connection fees with respect to calls received from her son, Mark, as described
above.
56.

Mark Skladany was moved to different institutions at various times in 2011 and

2012. As a result of a move, Ms. Skladany’s existing account was no longer valid to receive
calls from Mark, so she had to set up another account. In doing so, she incurred additional
service fees, as well as a $5 charge to close her prior account and receive a refund of the amounts
remaining in her old account.
57.

At various times during the time that Ms. Skladany has maintained an account for

Mark with the Defendants, the Defendants have frozen her account pending verification of calls
made by Mark and required additional prepayments even before the advance pay balance was
depleted in order to continue to receive telephone calls from Mark.
58.

Despite many requests, Defendants refused to provide Barbara Skladany and

Milan Skladany with written statements of their accounts identifying charges and rates.
59.

Dr. Crow became a customer of GTL when he established an advance pay

account in April 2013 in order to communicate by telephone with his son who was incarcerated
in the Mercer County Correctional Facility, Lambertville, New Jersey.
60.

Defendants forfeited the balance in Dr. Crow’s account in approximately July of

2013.
CLASS ACTION ALLEGATIONS
61.

Plaintiffs bring this action, on behalf of themselves and all others similarly

situated, as a class action pursuant to Fed.R.Civ.P. 23. Subject to confirmation, clarification

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and/or modification based on discovery to be conducted in this action, the class that Plaintiffs
seek to represent (“the Class”) shall be defined as follows:
all persons of the United States who, at any time since 2002 were incarcerated in a
New Jersey prison institution who use or used the phone system provided by
Defendants or, who established an advance pay account with Defendants in order
to receive telephone calls from a person incarcerated in New Jersey.
62.

As used herein, “Class Members” shall mean and refer to the members of the

Class as set forth above.
63.

This action is brought and properly may be maintained as a class action pursuant

to the provisions of Fed.R.Civ.P. 23(a)(1)-(4) and 23(b)(1), (b)(2) or (b)(3) and satisfies the
requirements thereof.
64.

Numerosity – Fed.R.Civ.P. 23(a)(1).

The members of the Class are so

numerous that individual joinder of all the members is impracticable. On information and belief,
there are not less than tens of thousands of persons who have been affected by Defendants’
conduct. The precise number of Class members and their addresses is presently unknown to
Plaintiff, but may be ascertained from Defendants’ books and records. Class members may be
notified of the pendency of this action by recognized, Court-approved notice dissemination
methods, which may include U.S. Mail, electronic mail, Internet postings, and/or published
notice.
65.

Commonality and Predominance – Fed.R.Civ.P. 23(a)(2) and 23(b)(3).

Common questions of law and fact exist as to the class members, as required by Fed.R.Civ.P.
23(a)(2), and predominate over any questions that affect only individual class members within
the meaning of Fed.R.Civ.P. 23(b)(3).
66.

The common questions of fact include, but are not limited to, the following:

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67.

(a)

whether Defendants have failed to fully and adequately disclose to
Plaintiffs and the other Class Members service charges to open and close
the account that are assessed to the class members in connection with their
use of Defendant’s telephone service;

(b)

whether Defendants have failed to fully and adequately disclose to
Plaintiffs and the other Class Members Defendant’s practice of forfeiting
the advance pay balance of their accounts whenever accounts remain
unused for 90 days and charging monthly inactivity fees;

(c)

whether Defendants have failed to fully and adequately disclose to
Plaintiffs and the other Class Members the per-minute rates that they will
be and have been charged when calls are made to them by incarcerated
persons;

(d)

whether Defendants’ practice of requiring advance fee deposits with such
charges, fees and forfeitures is a practice which warrants restitution or
treble damages under the New Jersey Consumer Fraud Act;

(e)

whether Defendants’ charging rates for phone calls that are a 100 times or
more higher than the rates at which they are acquired and charging such
opening, closing, transactional and forfeiture fees without disclosure of the
amounts at the times of sale are unconscionable commercial practices
and/or are practices constituting unfair enrichment; and

(f)

whether Plaintiffs and the other Class Members have sustained
ascertainable losses and damages as a result of Defendant inflated and
abusive charges and practices of non-disclosure and, if so, the proper
measure and appropriate formula to be applied in determining such
damages.

The questions of law that are common to Plaintiffs and the other class members

include, but are not limited to, the following:
(a)

whether the practices of Defendant complained of herein and/or
Defendant’s failure to make full and adequate disclosures to their
customers concerning such practices violate §201(b) of the Federal
Communications Act and regulations thereunder and/or 48 N.J.S.A. §
48:3-1 and § 48:3-2;

(b)

whether the practices of Defendant complained of herein and/or Defendant
failure to make full and adequate disclosures to their customer concerning
such practices violate one or more provisions of the New Jersey Consumer
Fraud Act (“CFA”) and regulations promulgated thereunder;

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68.

(c)

whether the practices of Defendant complained of herein and/or
Defendant’s failure to make full and adequate disclosures to their
customer concerning such practices constitute unfair, unlawful and/or
fraudulent business practices which warrant a refund as unjust enrichment
or treble damages under New Jersey law;

(d)

whether the inflated and abusive charges levied by the Defendants upon
their customers pursuant to the exclusive monopoly rights granted by the
State and County government constitutes an illegal taking in violation of
42 U.S.C.§1983; and

(e)

whether Plaintiffs and the other Class Members are entitled to the
declaratory relief sought herein.

Typicality – Fed.R.Civ.P. 23(a)(3). Plaintiffs’ claims are typical of the claims of

the other class members whom they seek to represent under Fed.R.Civ.P. 23(a)(3) because
Plaintiffs and each of the Class Members have been subjected to the same wrongful practices and
have been damaged thereby in the same manner.
69.

Adequacy of Representation – Fed.R.Civ.P. 23(a)(4). Plaintiffs will fairly and

adequately represent and protect the interests of the class members as required by F.R.Civ.P.
23(a)(4). Plaintiffs are adequate representatives of the Class because they have no interests that
are adverse to the interests of the other Class Members. Plaintiffs are committed to the vigorous
prosecution of this action and, to that end, Plaintiffs have retained counsel who are competent
and experienced in handling class action litigation on behalf of consumers.
70.

Superiority – Fed.R.Civ.P. 23(b)(3) A class action is superior to any other

available means for the fair and efficient adjudication of this controversy, and no unusual
difficulties are likely to be encountered in the management of this class action. The damages or
other financial detriment suffered by Plaintiff and each of the other Class members are relatively
small compared to the burden and expense that would be required to individually litigate their
claims against Defendants, so it would be impracticable for Class members to individually seek

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redress for Defendants’ wrongful conduct. Even if Class members could afford individual
litigation, the court system could not. Individualized litigation creates a potential for inconsistent
or contradictory judgments, and increases the delay and expense to all parties and the court
system. By contrast, the class action device presents far fewer management difficulties, and
provides the benefits of single adjudication, economy of scale, and comprehensive supervision
by a single court.
71.

Declaratory and Injunctive Relief – Fed. R.Civ.P. 23(b)(2) In the alternative,

this action is certifiable under the provisions of Fed.R.Civ.P. 23(b)(1) and/or 23(b)(2) because:

72.

(a)

the prosecution of separate actions by individual Class Member would
create a risk of inconsistent or varying adjudications with respect to
individual class members that would establish incompatible standards of
conduct for Defendant;

(b)

the prosecution of separate actions by individual Class Member would
create a risk of adjudications as to them that would, as a practical matter,
be dispositive of the interests of the other Class Members not parties to the
adjudications or substantially impair or impede their ability to protect their
interests; and

(c)

Defendant have acted or refused to act on grounds generally applicable to
the Class, thereby making appropriate final injunctive relief or
corresponding declaratory relief with respect to the Class as a whole and
necessitating that any such relief be extended to the class members on a
mandatory, class wide basis.

Plaintiffs are aware of no difficulty that will be encountered in the management of

this litigation that will preclude its maintenance as a class action.
FIRST COUNT
(Violation of the New Jersey Consumer Fraud Act)
73.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs 1 through 72 as though fully set forth herein.

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74.

Plaintiffs bring this claim pursuant to the New Jersey Consumer Fraud Act

(“CFA”).
75.

The CFA applies to Defendant’s actions and conduct described herein because it

extends to transactions that are intended to result, or that have resulted, in the sale of services to
consumers with a nexus to New Jersey, i.e.¸ telephone calls placed from New Jersey.
76.

Plaintiffs and each Class Member are “consumers” within the meaning of CFA.

77.

The telephone service that Plaintiffs and Class Members obtained from

Defendants comes within the definition of “services” set forth in CFA.
78.

Defendants have engaged in fraudulent and/or deceptive commercial practices in

violation of the CFA by charging excessive, undisclosed fees and charges as described above.
79.

In addition, Defendants have engaged in an unconscionable commercial practice

in violation of the CFA by charging excessive per-minute phone rates which are grossly in
excess of Defendants cost, and grossly in excess of the market price for phone calls, which they
are able to charge only because they have a monopoly on phone calls from designated detention
facilities, free from competition.
80.

Likewise, Defendants’ undisclosed fees are unconscionable in that Defendants

provide no services and Plaintiffs receive no benefit in return for those charges and/or the fees
and charges are grossly in excess of the incremental cost to Defendants for the activity for which
the fees and charges are imposed.
81.

Plaintiffs and other Class Members have suffered an ascertainable loss as a result

of Defendants violations by having to pay the foregoing excessive, undisclosed charges and fees,
as well as having to pay excessive rates for making or receiving telephone calls from New Jersey
inmates, as described above.

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82.

Further, unless Defendants are enjoined from continuing to engage in these

violations of the CFA, Plaintiffs and the other class members will continue to be injured by
Defendant’s actions and conduct.
SECOND COUNT
(Violations of the Disclosure Requirements
of the CFA effective August 1, 2008)
83.

Plaintiffs repeat the allegations contained in Paragraphs 1-82 as if fully set forth

84.

New Jersey amended the CFA effective on August 11, 2008 to require certain

herein.

additional disclosure requirements specifically applicable to prepaid telephone calling services,
such as those offered by Defendants described above, to those who purchase those services, such
as Plaintiffs and other Class Members.
85.

N.J.S.A. § 56:8-176(h) provides that a prepaid telephone service company “shall

not impose any fee or surcharge that is not disclosed as required by this section or that exceeds
the amount disclosed by the company.”
86.

New Jersey has adopted pertinent rules and regulations to enforce the

requirements of N.J.S.A. §56:8-176(h) which requires specific disclosures at the time of
solicitation or sale.
87.

Those regulations provide that the amendment to the CFA and regulations

promulgated pursuant thereto requiring disclosure by pre-paid telephone services are a
supplement to the enforcement and prosecutions of other practices unlawful under the CFA.
88.

As described above, Defendants did not disclose their fees, surcharges and

forfeiture policies when it required Plaintiffs to first open an account and purchase the right to
receive calls.

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89.

As described above, Defendants did not disclose the amounts of fees, surcharges

and forfeiture policies to customers who received a collect call for the first time from an inmate.
90.

Defendants informed customers, like Plaintiffs, in the initial set up call that their

telephone service was not programmed to receive collect calls and that they must open an
account with Defendant and prepay that account in the amount of $25, $50, or $100 or they
could not receive calls. Defendants did not disclose any specific set-up or closure fees or
surcharges or inactivity fees to be deducted and charged to customer’s accounts at the time of the
sale, as required by the N.J.S.A. § 56:8-176(a)(3) and applicable regulations.
91.

Defendants did not disclose that balances unused for 90 days would be forfeited

when customers received their first invitation to purchase the rights to receive calls and open an
account as required by N.J.S.A. § 56:8-176(a)(3).
92.

Defendants did not refer new customers to their websites in the first automated

calls inviting customers to purchase the right to receive calls and open an account.
93.

Defendants web-site now references that there will be fees but that website fails to

disclose the amounts of any set-up, closure or forfeiture fees as required by the N.J.S.A. § 56:8176(a)(3).
94.

Defendants, up through the filing of the action, failed to disclose any specific fee

amount that would be charged or forfeited by the customers at the time of sale as required by
N.J.S.A. § 56:8-176(a)(3).
95.

Defendants also violate N.J.S.A. § 56:8-176(a)(8) by failing to disclose

information required to be disclosed by regulations enacted by the Department of Consumer
Affairs. Those violations include failing to disclose:

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a.

Any surcharges and call setup charges, in violation of N.J.A.C. § 13:45A8.3(a)(1);

b.

The name of the provider of the actual calling services, in violation of
N.J.A.C. § 13:45A-8.3(a)(2)(i);

c.

The expiration period of the customer’s account, in violation of N.J.A.C. §
13:45A-8.3(a)(2)(v);

d.

That the service is subject to maintenance and other fees and charges, in
violation of N.J.A.C. § 13:45A-8.3(a)(2)(vi);

e.

Instructions as to how to obtain complete information about the use of the
calling services, including fees and charges for, and any restrictions or
limitations on the use of the account, in violation of N.J.A.C. § 13:45A8.3(a)(2)(vii)

96.

Defendants also violate N.J.A.C. § 13:45A-8.4 in that they charge fees, taxes,

surcharges and other amounts which are not permitted fees and/or which are not disclosed
pursuant to N.J.A.C. § 13:45A-8.3.
97.

Defendants also violate N.J.A.C. § 13:45A-8.11 in that the calling time purchased

from Defendants expire 90 days after their last use, but this expiration date is not provided to
customers when they open their accounts. In addition, Defendants violate this section in that the
90-day expiration date on accounts is less than the presumptive one-year expiration date set forth
in this regulation for accounts without a specific expiration date.
98.

Violations of the foregoing regulations are per se violations of the Consumer

Fraud Act.

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99.

Plaintiffs and other Class Members have suffered an ascertainable loss as a result

of Defendants violations by having to pay the foregoing excessive, undisclosed charges and fees,
as well as having to pay excessive rates for making or receiving telephone calls from New Jersey
inmates, as described above.
100.

Further, unless Defendants are enjoined from continuing to engage in these

violations of the CFA, Plaintiffs and the other class members will continue to be injured by
Defendant’s actions and conduct.
THIRD COUNT
(Violation of New Jersey Public Utilities Statutes)
101.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs 1 through 100, inclusive, as though fully set forth herein.
102.

Plaintiffs bring this claim for relief on behalf of themselves and the Members of

the Class.
103.

Intrastate phone rates within New Jersey are required to be “reasonable” and not

discriminatory by N.J.S.A. § 48:3-1 and § 48:3-2, which provides in pertinent part that a
company providing telecommunication services cannot:
a.
Make, impose or exact any unjust or unreasonable, unjustly discriminatory
or unduly preferential individual or joint rate, commutation rate, mileage and
other special rate, toll, fare, charge or schedule for any product or service supplied
or rendered by it within this state;
b.
Adopt or impose any unjust or unreasonable classification in the making
or as the basis of any individual or joint rate, toll, fare, charge or schedule for any
product or service rendered by it within this state.
N.J.S.A. § 48:3-1 or
… adopt, maintain or enforce any regulation, practice or measurement which shall
be unjust, unreasonable, unduly preferential, arbitrarily or unjustly discriminatory
or otherwise in violation of law.

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N.J.S.A. § 48:3-2
104.

Defendants have engaged in and continue to engage in the unlawful practices

alleged herein and have failed and continue to fail to make full and adequate disclosures to their
customers concerning these practices.
105.

Defendants’ customers are charged for unauthorized and inappropriate connection

fees, service fees and forfeiture charges among other charges which are unjust, unreasonable,
discriminatory and preferential in violation of N.J.S.A. §§ 48-3.1 and 48:3.2.
106.

Defendants take steps to conceal their unfair, unreasonable, preferential and

discriminatory charges to customer accounts willfully refusing to provide written account
statements.
107.

Defendants have not filed rates with the New Jersey Board of Public Utilities.

108.

As a direct and proximate result of Defendant’s violations of New Jersey Public

Utility Laws, Plaintiffs and the New Jersey class have been damaged in an amount according to
proof at trial.
FOURTH COUNT
(Unjust Enrichment)
109.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs 1 through 108, as though fully set forth herein.
110.

Plaintiffs and other Class Members reasonably expect that they would only have

to pay market rates for telephone calls placed by New Jersey inmates and would not have to
incur other charges which provide no commensurate benefit to them.
111.

As is described above, Plaintiffs and other Class Members do not receive what

they pay for with respect to the per-minute rates for telephone calls, because those rates are
grossly in excess of market rates, nor do they receive what they pay for with respect to the

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undisclosed fees and charges in that Plaintiffs and other Class Members receive no benefit
whatsoever from those charges.
112.

Defendants have been unjustly enriched at the expense of Plaintiffs and other

Class Members because Defendants have charged per-minute calling rates grossly in excess of
market rates and charged excessive fees and charges that Defendants would not be able to charge
but for the fact that they have a monopoly on telephone calls placed from New Jersey detention
facilities and are not subject to any competitive pressures of the market.
113.

The revenues and profits derived from these excessive charges run into several

million dollars per year.
114.

Under the circumstances it would be unjust for Defendants to keep such revenues

and profits.
115.

As a result, Defendants should be required to disgorge and restore to Plaintiffs

and the Class all monies wrongfully obtained by Defendant as a result of their extra charges to
open and closed accounts, forfeited balances and all other improper charges, together with
interest thereon.
116.

Wherefore Defendants should be enjoined from these unconscionable, abusive

and extortionate billing practices and Defendants should pay over all such unjust enrichment
received.
FIFTH COUNT
(Violation of The Federal Communications Act, 47 U.S.C. § 201)
117.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs l through 116, inclusive, as though fully set forth herein.
118.

Plaintiffs bring this claim for relief on behalf of themselves, the Members of the

Class.

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119.

Defendants are engaged in interstate wireless communications for the purpose of

furnishing communication services within the meaning of § 201(a) of the Federal
Communications Act (“FCA”), 47 U.S.C. § 201, et seq.
120.

Defendants’ practices complained of herein constitute unjust and unreasonable

charges and practices in connection with communication service and, therefore, violate § 201(b)
of the FCA. In addition, Defendants failure to make full and adequate disclosures of these
practices to their customers violates CFR § 64.2401 and, therefore, violates §201(b) of the FCA.
121.

Defendants have not filed its rates with the Federal Communication Commission.

122.

As a direct and proximate result of Defendants’ violations of §201(b) of the FCA,

Plaintiffs and the other Class Members have been damaged in amounts according to proof at
trial.
SIXTH COUNT
(Claim Under 42 U.S.C. § 1983 For Taking of Property
Without Just Compensation In Violation of the Fifth Amendment)
123.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs 1 through 122, inclusive, as though fully set forth herein.
124.

As is set forth above, Defendants are in a position to charge the excessive rates for

telephone calls and impose unconscionable rates and fees because of their exclusive contracts
with the State of New Jersey and various New Jersey Counties.
125.

Those contracts set the rates Defendants charge for making telephone calls from

the facility or facilities subject to the contract, and further provide that Defendants will pay a
percentage of the gross revenue (excluding certain collected taxes and fees) derived by
Defendants as a result of the contract which shall be paid to the contracting governmental entity.

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126.

Those percentages of revenue paid by Defendants to the governmental entities

range from 40% in the case of the State of New Jersey to 60.5% in the case of Bergen County.
127.

Upon information and belief, the percentage of revenue and per-minute calling

rates are agreed to as part of the process whereby the governmental entity contracts with the
qualified bidder who will pay the highest revenue to the governmental entity.
128.

Defendants act under color of law for purposes of 42 U.S.C. § 1983.

129.

At all times pertinent hereto, Defendants have acted with the help of and in

concert with state officials in that they were given the exclusive right to provide telephone
services for inmates housed in the respective detention facilities.
130.

Controlling access to and communications with incarcerated persons is a

traditional governmental function.
131.

But for the fact that Defendants have exclusive contracts with governmental

entities to provide phone services to persons incarcerated within that entity’s jurisdiction,
Defendants would not be able to charge the excessive per-minute rates and unconscionable fees
and charges to Plaintiffs and other Class Members because they would otherwise be able to
purchase substitute phone service elsewhere at a significantly lower costs.
132.

The entities represented by the aforementioned state officials receive a substantial

benefit from the unlawful activities of Defendants when the governmental entities are paid a
portion of the revenues generated by the charges imposed by Defendants.
133.

The governmental entities’ are encouraged by Defendants to turn a blind eye to,

Defendants’ imposition of unconscionable fees and charges on top of the already unconscionable
per-minute charges for telephone calls.

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134.

Defendants’ excessive and unconscionable charges constitute a taking of property

from the Plaintiffs without just compensation and is contrary to the Fifth Amendment of the
Constitution.
135.

Plaintiffs and other Class Members have a property interest in their money.

136.

The calling time that Plaintiffs and other Class members receive is not just and

adequate compensation for the unconscionably excessive per-minute charges for phone calls
imposed by Defendants.
137.

In addition, as is set forth above, the other fees and charges imposed by

Defendants, such as the 20% set-up fee, the per-call connection fee, the $5.00 refund charges,
inactivity fees and the forfeiture of unused accounts, are likewise a taking of property without
just compensation because those charges are grossly in excess of any benefit provided.
138.

The State and Counties have delegated authority to the Defendant’s sufficient that

the Defendants’ forfeiture actions and takings of the Plaintiffs’ money is an illegal taking by
virtue of State action with the meaning of 42 U.S.C. §1983.
139.

As a result of the imposition of the foregoing unlawful charges and fees, Plaintiffs

and other Class Members have been damaged.
SEVENTH COUNT
(Declaratory Relief Under The Declaratory
Judgment Act, 28 U.S.C. § 2201, et seq.)
140.

Plaintiffs repeat and incorporate herein by reference each and every allegation in

paragraphs 1 through 139, inclusive, as though fully set forth herein.
141.

Plaintiffs bring this claim for relief on behalf of themselves and other similarly

situated prisoners and detainees.

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142.

An actual controversy has arisen and now exists between Plaintiffs and the other

Class Members, on one hand, and Defendants, on the other hand, concerning their respective
rights and duties in that Plaintiffs and the other Class Members contend that Defendant has
engaged in and are continuing to engage in the unlawful practices alleged herein and have failed
and continue to fail to make full and adequate disclosures to their customers concerning these
practices, while Defendant apparently will contend that their actions and conduct are lawful and
proper.
143.

A judicial declaration is necessary and appropriate at this time, under the

circumstances presented, in order that Plaintiffs and the other class members may ascertain their
rights and duties with respect to Defendant’s practices.
WHEREFORE, Plaintiffs pray for judgment as follows:
(a)

For compensatory damages;

(b)

For treble damages in accordance with the New Jersey Consumer Fraud

(c)

For an Order enjoining Defendants from engaging in the practices alleged

Act;

herein and/or mandating that Defendants make full and adequate disclosures to their
customers concerning these practices.
(d)

For disgorgement and restitution to Plaintiffs and the other Members of

the Class of all monies wrongfully obtained by Defendants; and
(e)

For prejudgment interest on the monies wrongfully obtained by

Defendants from the date of collection through the date of entry of judgment in this
action;

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(f)

For all attorneys’ fees, expenses and recoverable costs reasonably incurred

in connection with the commencement and prosecution of this action in accordance with
the Consumer Fraud Act and 42 U.S.C. § 1988; and
(g)

For such other and further relief as the Court deems just and proper.
CARELLA, BYRNE, CECCHI,
OLSTEIN, BRODY & AGNELLO PC
Attorneys for Plaintiffs

By: /s/ James E. Cecchi
JAMES E. CECCHI
WALDER, HAYDEN & BROGAN, P.A.
Attorneys for Plaintiffs

By: /s/ James A. Plaisted
JAMES A. PLAISTED
Dated: August 20, 2013

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JURY TRIAL DEMAND
Plaintiffs request jury trial on all issues so triable.
CARELLA, BYRNE, CECCHI,
OLSTEIN, BRODY & AGNELLO PC
Attorneys for Plaintiffs

By: /s/ James E. Cecchi
JAMES E. CECCHI
WALDER, HAYDEN & BROGAN, P.A.
Attorneys for Plaintiffs

By: /s/ James A. Plaisted
JAMES A. PLAISTED
Dated: August 20, 2013

28

EXHIBIT I

FCC Workshop on Inmate Calling Services - Panel 2, Ancillary Charges

EXHIBIT J

SINGLE CAWNG PROGRAMS

Description
Individual Call Billed to Cell Phone

Fees as High as:
$9.99 per Call
(Billed as Premium SMS Text Messag_el
$14.99 per Call
.
(Includes $1.80 for call+ transaction fee of$13.19)

Individual Call Paid via Credit or Debit Card
PAYMENT PROCESSING FEES

Payment Method:
Fees as High as:
Credit Card with Customer Service Representative
$10.95 per Payment*
Credit Card via Vendor Website
$10.95 per Payment*
Credit Card via Phone IVR
$9.95 per Payment*
Cash via Lobby Kiosk
$9.50 per Payment
.
Western Union®
$12.45 includingvendormark-up or fee
Money Gram®Wal-Mart
$10.99 including vendor rnark-u_p or fee*
*These fees have increased since the FCC Order was approved
ACCOUNT FEES

. Description
Account Set-up Fee
Account Maintenance Charge
Invoice Charge
Refund Processing Fee

Fees as High as:
$10.99 per month
$5.00 per month
$5.00 12er Invoice
$10.00 per refund
ACCOUNT ACTMTY FEES

Description
Bill Processintt Bill Cost Recovery- or Bill Statement Fee
Carrier Cost Recovery Fee
State Administration Recove_ry_Fee
Federal Regulatory Recovery Fee
Validation Surcharge
Wireless Administration Fee
Regulatory Assessment Fee
Regulatory Cost Recovery Fee
Carrier Administrative Cost Recovery Fee (Pre-paid & Debit Calls)
Universal Service Fund (USF) Administrative Fee
Pre-Call Voice Verification
Continuous Voice Biometric Identification Fee

FCC Workshop- WC Docket 12-375- July 9, 2014

Government Mandated?

No
No
No
No
No
No
No
No
No.
No
No
No

Fees as High as:
$3.45 per month
$2.50 for 1st and 5th Calls each month
$1.95 per month
$3.49 per month
4% per call
$3.99 p_er month
$. 99 for 1st & 5th calls each month
$.95 + 10%~er call
8% per call
$1.00 per month
$0.25 per call
$0.50_per call

Prepared by Pay Tel Communications, Inc.

ICS Vendor Fees More Than Double the Cost of Calls for Families
If a family has budgeted $100 for calls during a month,
and they make a $25 payment each week using the-vendor's website,
how much money is available for calls?

•

PAYMENT PROCESSING FEES (Per Payment)**
Vendor A ................................ ........... ..................................... .......... $10.95
Vendor B ..... ............................................. .... ....... ........... ....................$6.95
Vendor C (plus Acct Setup Fee of $10.99) .................. ......................$5.50
Vendor 0 ..................... .................... ..... ................................ .............. $9.95
Vendor E ........................................ ....................................................$7 .95
Vendor F (as high as 39% including taxes) .......................................$9.75
Average Payment Fees Per Payment... .... ...... ................... ................$8.75
Average Payment Fees per Month ..................................................$35.00

0

ACCOUNT FEES**
Bill Processing Fee ..................... .... .. .... .. .......... .......................... $3.49/mth
Wireless Administration Fee ................... .... ....................... up to $3.99/mth
Validation Surcharge ........................................ ..................... ... .4% per call
Carrier Administrative Cost Recovery Fee ... .... .........................8% per call
Regulatory Assessment Fee (1st & 5th call) .............................$0.99 each
Regulatory Cost Recovery Fee ............ .... ............. ..... $0.95 + 10% per call
Average Account Fees per Month .... .. .......... .... ............................ ... $1 0.00

•• The fees shown are based on public information
gathered from vendor tariffs, recent proposals and/or
company websites.

•

SINGLE CALL PROGRAM WITH CREDIT CARDS
One Call per Month ............... .......... .... ............ .............................. ... $14.99

• REVENUE AVAILABLE FOR CALLS ONLY$401 '

THE IMPACT OF FEES ON THE NUMBER OF FAMILY CALLS: ONLY 12 CALLS
Funds available for calls ($40) + Price per call ($3.15t) = Number of calls: 12

THE IMPACT OF FEES ON THE ACTUAL COST TO FAMILIES: $8.33 PER CALL
Family funds of $100 +Number of calls: 12 =Actual cost per call: $8.33
$8.33 minus the quoted rate of the call ($3.15t) = Difference paid in fees: $5.18
tBased on the FCC interim interstate rate for a prepaid 15 minute call

FCC Workshop- July 9, 2014, Docket No. 12-375

Prepared by Pay Tel Communications, Inc.

EXHIBIT K

EXHIBIT L