The nation’s two largest inmate phone service providers and a marketing company and payment processor face a proposed class action that alleges the entities are behind a scheme to artificially inflate prices for calls between incarcerated individuals and those on the outside.
Filed in Maryland federal court, the 122-page suit claims Global Tel*Link Corp. (GTL), Securus Technologies and 3CInteractive Corp. have been able to effectuate their competition-suppressing scheme, charging “astronomical” flat prices for single inmate-placed phone calls, in part by “lying to local governments and their own customers” about the costs of said phone calls while agreeing to eliminate competition among each other.
The lawsuit looks to represent individuals who have been charged anywhere from $9.99 to $14.99 to receive a single collect call made from a prison or jail in the United States.
Securus and GTL have for the last decade dominated the market for inmate calling services (ICS), implementing and charging for approximately 80 percent of all calls made by prison and jail inmates around the country, the lawsuit says. Inmates looking to place calls to family, friends or lawyers must utilize ICS, and Securus and GTL have contracted with local and state governments to provide those services to prisons and jails for contractually agreed-upon rates, according to the case. Those same contracts also promise to provide local or state governments with a cut of the revenue, averaging roughly 50 percent, earned from calls made from prisons or jails, per the suit.
Prior to 2010, it was standard for Securus, GTL and other ICS providers to charge consumers a per-minute rate for collect calls made by inmates, the suit says. The recipient of an inmate call would generally establish an account with an ICS provider using a credit card, which would then permit the individual to receive multiple calls from an inmate over a period of time, the case explains. For collect calls made through the account, the complaint says, the recipient’s credit card would be charged the applicable per-minute rate specified in the contract between the ICS provider and government entity with whom it’s contracted.
The case adds that within the aforementioned system, the average cost of a collect call from a state prison in 2017 that charged a per-minute rate and lasted a total of 15 minutes was roughly $1.87.
In 2010, however, Securus launched the “single call” option for inmates, the suit continues. According to the lawsuit, to accept a single call from an inmate under this model, the recipient did not need to establish an account or pay a per-minute rate. Instead, the suit says, Securus began to charge “an excessive flat price to accept a single call, regardless of the duration of the call,” offering the PayNow option, which charged $14.99 for a call lasting up to 15 minutes, and Text2Connect, which charged a recipient’s mobile phone account $9.99 for a call lasting up to 10 minutes.
The PayNow and Text2Connect options were included in Securus’s contacts with state and local governments in addition to the option for those with accounts looking to utilize traditional collect calls charging a per-minute rate, the lawsuit says, noting Securus paid governments “especially low site commissions” for single calls as opposed to traditional per-minute ICS calls.
Soon after Securus rolled out its PayNow program in 2010, GTL began development on its own single-call program, then dubbed AdvancePay OneCall (APOC), the suit goes on. Through APOC, the case says, call recipients were charged a transaction fee of up to $3 plus a per-minute rate equal to that paid by recipients with traditional accounts. The suit summarizes that GTL’s APOC would not only charge call recipients significantly less for single calls than Securus would through its PayNow and Text2Connect programs but would also pass along a substantial share of any revenue to state and local governments.
In a competitive market, GTL’s offering of its more affordable single-call program would have forced Securus to lower its single call rates and also increase the commissions it passed along to state and local governments, the suit says. Instead, the defendants allegedly agreed to eliminate price competition and fix the prices of single calls placed by inmates, a scheme the case says was kicked into motion in November 2012 when Securus bought 3CI’s patent for technology used to charge mobile phone accounts for single calls.
“According to a former 3CI executive, 3CI was subsequently not permitted to provide services involving the patented technology to GTL without Securus’s express permission and approval of the contract terms,” the lawsuit claims.
After a contract was formed between 3CI and GTL, the latter began offering single-call options markedly similar to those offered by Securus—Collect2Card, which charged $14.99 for a call lasting up to 15 minutes, and Collect2Phone, charging $9.99 to a recipient’s mobile phone account for calls lasting up to 10 minutes, the lawsuit says.
To defend the high single-call rates, the defendants essentially lied to consumers and the governments with whom they contracted about the exact value of transaction fees the companies claimed to be paying to 3CI, the plaintiffs allege. From the lawsuit:
“Specifically, Defendants repeatedly and falsely represented that most of the revenue from each such single call went to pay transaction fees imposed by 3CI to implement those calls. In actuality, the transaction fees paid by Securus and GTL to 3CI to operate single calls comprised less than half of the $14.99 or $9.99 charged for those calls. Although the actual value of those transaction fees was, according to a former GTL employee, a “well-kept industry secret,” several former executives of Defendants have conceded that the majority of each $14.99 or $9.99 charge for a 3CI-operated single call was ultimately retained by Securus or GTL.”
The lawsuit alleges that the defendants would not have been able to charge $14.99 and $9.99 for single calls placed through 3CI had they honestly represented the value of the transaction fee paid to the company. Specifically, the suit surmises contracting governments would not have allowed the defendants to charge such high prices for single calls had they known the truth.
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