CFPB documents the financial burdens imposed on justice-involved individuals

The Consumer Financial Protection Bureau has just issued an extraordinary new report on the financial challenges faced by justice-involved individuals in navigating each stage of the criminal justice system. The report, which describes itself as “the first of its kind done by the CFPB,” paints a devastating picture of how the criminal law enforcement system conspires at every step to exacerbate the financially precarious situation in which many entering the justice system already find themselves.

“Justice-Involved Individuals and the Consumer Financial Marketplace” documents in clear and compelling prose how the financial products and services marketed to individuals and families entangled in the criminal justice system “too often contain exploitative terms and features, offer little or no consumer choice, and can have long-term negative consequences for the individuals and families affected.” What the CFPB researchers found “raises serious questions about the transparency, fairness, and availability of consumer choice in markets associated with the justice system, as well as demonstrating the pervasive reach of predatory practices targeted at justice-involved individuals.”

The report explores the financial burdens imposed by the criminal law enforcement system in four contexts: pretrial, incarceration, reentry, and criminal justice debt.  We found both insightful and energizing, in light of several projects we are currently working on, the report’s thoroughly-sourced analyses of the high cost of diversion and bonding at the pretrial stage, the failure to regulate background screening, the lack of access to business capital at the post-conviction stage, and the consequences of outstanding criminal justice debt at every stage.

We were especially pleased that our work on Small Business Act lending policies is cited in the section on access to business capital. Our forthcoming 50-state report (with the National Consumer Law Center) on court debt as a barrier to record clearing, whose publication is imminent, will add a new dimension to the CFPB’s analysis of the consequences of unpaid fines, fees, and restitution. Finally, we’ll now be able to incorporate the CFPB’s critique of unreliable background screens and expensive diversionary dispositions into our updated national survey of restoration and record relief mechanisms, the Many Roads to Reintegration, and the 50-state ranking of the Reintegration Report Card, both of which we expect to issue later this month.

The CFPB report is well worth a close look on other issues, including the exorbitant cost of prison-sponsored contract services (e.g., for telephone and other communications, and for access to education and training). It documents in detail how “governments are shifting the cost of incarceration to people who are incarcerated and their families,” and how communication restrictions make it difficult for people “to manage finances while incarcerated, which can result in increased debt, deteriorated credit ratings, and diminished access to credit.”

The CFPB report concludes with a promise from the agency that it will stay on top of the consumer protection issues raised by this commendable report:

The CFPB intends to engage stakeholders to learn more about the challenges facing those involved in the criminal justice system and how the CFPB can use its tools to safeguard families from harm. The CFPB is particularly interested in the market circumstances in which people may be forced to use a prescribed product or service, and in how an individual’s criminal history might be used by some actors to restrict economic opportunities—undermining the goal of successful reentry. Entities covered by federal consumer financial laws that target or market to individuals and families involved in the criminal justice system should ensure that their activities are in compliance with law.

We welcome the CFPB’s presence in looking critically at the issues that concern all advocates for justice-involved individuals, whose implications extend well beyond the consumer level. We hope it augurs well for the attention of the Biden Administration to these issues, because a number of other federal agencies bear responsibility for addressing the “predatory practices targeted at justice-involved individuals” so effectively illuminated by the CFPB, including the FCC, the SBA, and the Department of Justice.  Hopefully Congress is also listening.