LITTLE ROCK (CN) - A giant telecom company gouged prison inmates by charging more than 100 times the going rate for phone calls in more than 2,000 prisons, inmates claim in a class action.
Lead plaintiff Susan Mojica sued Securus Technologies on Aug. 14 in Federal Court.
Mojica claims that Securus gained monopoly power to supply telephone services to some 2,200 jails and prisons in 45 states by paying kickbacks disguised as commissions. The 2,200 jails and prisons hold more than 850,000 prisoners, according to the complaint.
Securus' virtual monopoly allowed the Dallas-based telecom "to exploit plaintiff and the class by charging them unreasonably 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," Mojica says in the complaint.
"As a result of the absence of competition, 'families of incarcerated individuals often pay significantly more to receive a single 15-minute call from prison than for their basic monthly phone service."
The market rate for competitively priced prepaid calling cards is about $0.01 to $0.02 per minute for calls within the United States, and prepaid calling card rates for international calls are as low as $0.01 per minute, according to the complaint.
"Securus, however, charges vastly more - as high as $0.89 per minute - for calls within the United States, not including exorbitant per call connection fees. Securus likewise charges exorbitant per minute rates for international calls," the complaint states.
It continues: "Illustrating the unreasonableness of the rates it charges, Securus purchases its minutes for calls terminating within the United States from connection carriers for less than a penny per minute. As a result, Securus often resells the minutes it buys at more than 100 times their cost to plaintiff and the class. Indeed, when commission payments were removed from 2012 cost data provided by Securus to the FCC, its cost-per-minute rate was only $0.04, including all of its operational costs and call transmission costs."
Mojica claims that payment of kickbacks by inmate telephone service providers is common and substantial, "with reports estimating that kickbacks paid to correctional facilities exceed $103.9 million per year."
"For example, Securus reportedly gave $4.3 million in kickbacks to correctional facilities in Arizona and $5.15 million in kickbacks to correctional facilities in Florida. As a result of these contracts providing kickbacks, Securus has served as the sole telecommunications provider for persons held in many federal, state, and county correctional facilities throughout the United States," the complaint states.
The Federal Communications Commission slapped Securus with restrictions for violating the Federal Communications Act, determining that the company "exploited its economic position by charging rates for interstate calls greatly exceeding the cost of providing service," according to the complaint.
Securus was formed in 2004 when Miami-based H.I.G. Capital bought "two inmate telephone service giants," Evercom Systems and T-Netix, which had consolidated their own control of inmate telephone services in the 1990s, according to the lawsuit.
Calls to Securus Technologies seeking comment Friday were not returned.
Mojica seeks class certification and seeks damages for violations of the Federal Communications Act and unjust enrichment.
She is represented by Amy C. Martin with Everett Wales & Comstock, of Fayetteville, Ark.