Skip navigation

Coverage of HRDC suit against Numi Financial, re release debit cards

Reuters, March 2, 2016.

Lawsuit over prepaid jail cards survives forced arbitration bid


March 2 ­ A Portland, Oregon woman who said she was forced to accept a debit card for money she was owed when she was released from jail has defeated an attempt to have her proposed class action dismissed and submitted to binding arbitration.

The lawsuit by Danica Brown, arrested in a protest over the shooting death of Ferguson, Missouri’s Michael Brown, seeks damages for inmates nationwide who are forced to take debit cards on their release, often paying fees when the cards are used.

Named as defendants are Stored Value Cards, a California company doing business as Numi Financial that specializes in prepaid cards, and Central National Bank & Trust Co of Enid Oklahoma, which contracts with Stored Value as the issuing bank for prepaid cards.

”Prepaid debit cards are an efficient, useful and widely accepted tool for handling inmate funds,” a spokesman for Numi said in a statement, adding that it will vigorously defend against the lawsuit.

A spokesman for the bank did not immediately respond to a request for comment.

In a decision last week, U.S. District Judge Michael Mosman rejected defendants’ argument that the case should be dismissed because the cardholder agreement for the prepaid cards requires all disputes to be resolved by arbitration.

A court cannot order arbitration unless the parties both agreed to it, and Brown alleges that she did not receive or sign the arbitration agreement, Mosman said.

”Ms. Brown had to take the card and had to work through defendants’ system in order to get her money back,” Mosman said. It is not clear that she had a meaningful choice, he said.

Prepaid cards are increasingly used around the country to return money confiscated from prisoners or earned while they are incarcerated. Prison Policy Initiative, an advocacy group, has urged U.S. regulators to look into the cards, saying companies are charging predatory fees to inmates acutely in need of cash when released.

”The practice itself is fundamentally unfair ­to take people’s money out of their pockets and return it to them a short time later in a different format,” said Lance Weber, a lawyer for Brown and general counsel at the Human Rights Defense Center.

Brown, a doctoral student at Portland State University, was arrested for disorderly conduct and interfering with a peace officer at a November 2014 protest. Charges were later dismissed.

Her lawsuit said $30.97 was confiscated from her when she was jailed and returned on a prepaid card when she was released. Five days later, she was charged a $5.95 monthly fee and a 95 cent service charge, the lawsuit said.

Filed last year, the lawsuit alleges violations of state and federal consumer protection laws, unjust enrichment and unlawful conversion of consumers’ funds.

In a court filing, defendants’ lawyers said Brown could have used the card without paying fees by making retail purchases, getting cash back from a merchant or going to a bank teller. A document explaining how to avoid fees was given to Brown on her release, they said.

The case is Brown v. Stored Value Cards, U.S. District Court, District of Oregon, No. 15­1370.

For the plaintiffs: Benjamin Haile at Portland Law Collective, Lance Weber at Human Rights Defense Center and Raymond Audain at Giskan Solotaroff & Anderson

For the defendants: Andrew Scavotto and Jeffrey Mason at Stinson Leonard Street and Eric Nystrom at Lindquist & Vennum