In the summer of 2007, brothers Ron and Gregg Hodge, Jim Sylvester and Frank Hofmeister sat around the kitchen table and discussed how to implement a prison payment system for city and county jails. Contacts in the criminal justice system had told them correctional facilities sought to save time and money by eliminating the issuance of paper checks to inmates upon their release from jail.
The solution became a prepaid debit card program launched by Continental Prison Systems Inc., doing business as EZ Card & Kiosk LLC. The program is based on the EZ Exit Card and self-service kiosks located within jails.
According to Hofmeister, Director - New Business & Product Development at Continental Prison Systems, when individuals are booked into jail, the amount of cash (paper money and coins) they have on their persons is fed by inmates into booking kiosks. The inmates are issued receipts for the amounts, and the funds are deposited into Web-based inmate trust accounts.
Upon release from jail, inmates are issued EZ Exit Cards loaded with the cash amounts they entered with, minus in-jail commissary purchases such as snacks and toiletries.
Ron Hodge, Chief Executive Officer at Continental Prison Systems, said the card is an open-loop, PIN-based, nonreloadable prepaid card.
Although the card is not network-branded, Hodge maintains it can be used on ATMs within jail complexes and at POS locations outside them, such as gas stations and supermarkets. It cannot be used for Internet transactions, he added.
"We're dealing with a lot of facilities where a high percentage of inmates don't have checking accounts," Hodge said. "So they like the card because it saves them from the astronomical check cashing fees they normally incur when they leave."
From the viewpoint of correctional facilities, the system saves them the time and expense of having to issue paper checks, Hofmeister said. But the program also is a money saver in the fraud department because it eliminates jail workers from handling money altogether.
"Because we found there's a very high degree of mistakes of money counting ... that's very prevalent in the city and county level," Hofmeister said. "It's because they handle so much money. It's staggering the amounts of money, we've come to find out."
For example, a man may have been booked into jail with $100 but was returned only $50 when he was released. "Where'd the other $50 go?" Hofmeister said. "It was the officer's word against the inmate's word. So officers usually won. But there's been enough lawsuits and firings and whatnot. [The EZ Exit Card] eliminates all that."
Since jail staff never handle paper money with Continental's system, Hofmeister said the mishandling of funds is no longer an issue. Furthermore, the system eradicates check fraud once inmates are returned to society. "A very high percentage of the inmates haven't learned their lesson because they get a $20 check and turn it into a $2,000 check," Hofmeister said.
The system also eliminates the expense of having to reissue lost checks and reconcile checks that have not been cashed. "Can you imagine, you got a DUI," Hodge said. "You get a check for $24 that says Reno County Jail. And you don't want to be embarrassed and so you just don't cash it. [The jail] has to reconcile their books every month for five years.
"And then the state comes in a lot of times and takes those funds. It's, pardon the expression, a very big pain ... for them."
But the service does not stop there. In city and county jails in Colorado, Utah, Texas, and most recently California, Continental Prison Systems has installed EZ Money Load kiosks in jail lobbies, Hofmeister said. The machines allow inmates' families and friends to load funds onto inmates' trust accounts using plastic or cash. Money can also be deposited onto accounts online, thereby saving trips to jails.
Another service the Lodi, Calif-based company offers is the EZ Release kiosks located in booking rooms, where inmates or others can post bail using credit or debit cards. Bail can be posted online as well.
But the system is not just about streamlining inmate processing, Hodge said. Continental Prison Systems is attempting to capture the business of unbanked consumers by upselling inmates (and their families) to reloadable cards.
"We're going to be starting a marketing campaign to capture that inmate when he leaves because those people are very much sought after [as consumers] - the illegal aliens and the people you can't market to because you don't know where they are," Hodge said.
Regrettably, Hodge expects this consumer population to expand. "Obviously, in a bad economy, more people commit crimes, and the population actually grows at a faster rate," he said. "Not that I would like that to happen. It's just a fact."
Though this market opportunity may not be pretty, it's wide open, Hodge said. "We're the only company right now that supplies the whole gamut of products and services," he claimed.
Continental Prison Systems, which reported in February 2009 that it was awarded the Pinnacle Award in Colorado for having the most innovative new product, is interested in establishing relationships with ISOs to market its services nationwide.
For more information, call Gregg Hodge, Vice President of Sales and Marketing at Continental Prison Systems, at 303-810-9472.
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