JPMorgan Chase to pay fees back to former prisoners after what might be a new low for the banking industry

In a battle between an ex convict and a bank, here's why you should be cheering on the man who was wearing an orange jumpsuit up until recently

JP Morgan Chase accused of over charging ex offenders (Reuters)

In the grey and blue corner: JPMorgan Chase. In the orange jumpsuit corner: The wonderfully named ex-convict Jesse Krimes. Who on earth should you root for? The bankers or the criminal? Or do you just hope that the roof falls in, knocking them both out?

Before you say “that third option looks pretty good to me” let’s consider the facts of the case.

America’s biggest bank (by assets) in 2008 won a government contract to supply former inmates of federal prisons with pre-paid non refillable debit cards that would allow them to access money that had been earned, or sent to them, while serving their sentences.

A sound idea given the difficulties of adjusting to life outside the prison walls. Ex-prisoners still need to eat, after all. Well done JP then?

Hang on just a sec. Unfortunately. the cards came with a catch. Well, several catches. The terms and conditions were greatly inferior to those on offer to customers on the outside. They included a $10 (£7.50) charge for making a withdrawal at a teller’s window and a $2 fee for using non-network cash machines. The ex-con customers even had to pay 45 cents just to check their balances. That’s the equivalent to maybe two hours labour inside.

With no competing service, the former offenders were in effect being told to take it or leave it.

Aw, boo hoo, is probably the reaction many might have at this point. If you don’t want to do the time don’t do the crime. And if ex cons get turned over by a bank, so what? It might do them good to know how it feels.

The problem is these people had done their time. They’d paid their debts to society. Krimes, an artist based in Philadelphia, had spent six years inside for possession of cocaine with intent to distribute before entering a halfway house. That was when he noticed that the meagre $250 he had to his name was being rapidly eroded, not as a result of any costs he was incurring but as a result of those imposed on him by the bank.

He’s hardly getting rich off the outcome of the lawsuit, which has now settled. JP is paying out $446,822 to reimburse former inmates, plus $250,000 in plaintiff’s fees and costs. Thousands of former prisoners are eligible to share in the settlement which will net them a few dollars each.

But every little helps when you’re on the breadline, and that’s where most prisoners find themselves upon their release.

Incarcerating large numbers of people like the US does, and like the UK does too for that matter, is an economic nonsense. It’s ruinously expensive and produces terrible outcomes given the huge number of people that reoffend after their release and end up back where they started after leaving a trail of misery in their wake. There are better ways to deal with offenders that achieve better results. It’s the one, and just about the only, thing I agree with former Justice Secretary Michael Gove on.

Allowing prisoners to be exploited by banks makes a bad situation worse, heightening the risk of their re-offending by starving them of funds.

Given the facts of the case, I know who I sympathise with. You’ll see me with the part of the crowd waving orange jumpsuits.

It’s hard to believe that bankers have managed to make even former criminals look good. But in this case they have.