That income is crucial because it allows vendors to offer the debit card service at no charge to correctional facilities while eliminating those facilities’ cash management expenses. The cost of issuing and managing the cards is paid for solely by the exorbitant fees former inmates must pay, fees that quickly deplete their already meager balances.

Banking giant JPMorgan Chase is the exclusive release-card vendor in federal prisons. At state and local facilities these cards are provided by a handful of smaller vendors such as JPay, Keefe Group , Numi Financial and Rapid Financial Solutions. A review of bids and contracts in several states and counties found ATM withdrawal fees of nearly $3 per transaction. A simple balance inquiry typically incurs a charge of $1.50. Account maintenance fees, deducted even if no transactions are made, can be as much as $2.50 per week. Cardholders who opt to transfer their balances to a bank account can be charged closing fees of $30. These cards are designed to generate income for the private vendors that furnish them.

Unlike consumer debit cards, prison-issued cards are completely unregulated when it comes to the fees that can be charged. The result is high transaction and maintenance fees that bear little relation to the actual costs of the services provided.

The use of these cards is expanding into jobs programs for current inmates. In 2014 the Alabama DOC began using debit cards with high ATM fees to pay inmates at a small number of its work-release facilities and plans to roll out the program statewide by July.

Correctional facilities across the country are increasingly sending former inmates home with their funds returned on pre-paid debit cards , known in the industry as release cards. In addition to adoption by the Federal Bureau of Prisons, 17 state prison agencies reported using them in a 2014 survey commissioned by the New Jersey Department of Corrections. Prison reform advocates such as Peter Wagner of the Prison Policy Initiative say that their use is even more widespread among the nation’s nearly 3,300 jails. With almost 12 million people admitted to county and city jails each year, these local facilities provide a steady source of cardholders subject to high fees. “The money is in the recidivism not rehabilitation,” said Cavaluzzi.

But when he used the card to pay for a celebratory meal at Wendy’s, Cavaluzzi noticed that his balance was lower than he expected. “I called Chase and they said there’s an administrative fee and a fee every time you use it at an ATM,” he said. As Cavaluzzi would soon discover, those were just two of several fees attached to his card. “There were fees for transferring the money to a bank and closing the account. There was even an inactivity fee if you didn't use the card for 90 days. I left prison with $120. Because of the fees I was only able to use about $70 of it.”

In 2013 Gregg Cavaluzzi walked out of federal prison with nothing more than the clothes he wore going in five years earlier and a Chase-branded debit card holding what remained of money sent by family members and the meager pay he’d earned working in the prison library.

Editor's Note: This is the first of a two-part series on prison profiteering schemes that provide inmate services at a high cost to a population that is disproportionately poor. Part two looks at prison tablets and other tech devices.

‘I left prison with $120. Because of the fees I was only able to use about $70 of it.’

JPay, a Florida-based pioneer of financial services for inmates, currently has release card contracts with 15 state corrections agencies, according to a company spokesperson. The company recently announced it will become a subsidiary of Securus Technologies, one of the nation’s largest prison telephone vendors. Despite the high charges, JPay CEO Ryan Shapiro has asserted that release cards are actually not very profitable because the user fees go mostly to middlemen. “[The cards are] not really a revenue-generating or a money-making business for us,” he told the Center for Public Integrity last year.

Offering release cards as part of a full-service portfolio, however, helps JPay win and maintain contracts for its lucrative money transfer business. In a 2013 bid proposal the company claimed to operate money transfers for 25 state DOC agencies and 60 county jails, serving a combined population of more than 1.4 million inmates. These contracts brought JPay $50 million in revenue, according to the Center for Public Integrity.

That revenue comes exclusively from the fees charged to family members who are being forced to use electronic money transfers when sending funds to loved ones who are incarcerated. Rates vary with the amount sent but a review of fee schedules in multiple states found charges of more than 30 percent on small transfers.

These fees are an additional hardship on families and loved ones, many of whom struggle just to make ends meet. Julie Donald sends money regularly to a close friend in Arizona’s Eyman state prison. The amount she can afford to send varies. “Lately because I’ve been hurting on money I’ve been sending him only $25,” she said. “And it’s been a $5 fee just to do that. I don’t have a lot of money. If you keep adding [the fees] up it’s a lot.” Asked how she manages to send money on a tight budget, Donald replied, “I just don’t pay some bills.”

Dottie Smith’s sister has been in Arizona’s Perryville prison for 15 years. “We just sent her money today,” she said. “We sent $45 and they charged us $6.45. My mom and I do a ton of these money transfers. We alternate and send her money every other week. My mom works an extra job just so she can have money to send.”

On top of the money transfer fees Dottie and her mother are charged, she says the DOC automatically deducts a 1 percent fee from her sister’s inmate fund for every deposit, a deduction she says was never disclosed to the family. “We wouldn’t have known about this fee unless she told us,” Smith said.

A spokesperson for the Arizona DOC confirmed the account deductions via an email, stating the money goes into a building-renewal fund for repairs and routine maintenance throughout all DOC facilities, as does a $25 background check fee that’s been charged to first-time visitors of inmates since 2011. “Prison is a racket,” Delonda McInelly, a former Perryville inmate said bluntly. “It really is a profitable business. The families are being treated like criminals and it’s not fair.”

Money orders have been eliminated altogether as an option for sending funds at some facilities. At those that still allow the service, family members and former inmates say money orders must now be mailed to the vendors, not the facilities where the inmates are held.

Rosemary Collins has a son in Alabama’s St. Clair state prison. The money transfer vendor Keefe Group is based in St. Louis. “For a money order I have to mail it to Missouri,” she said. “I’m in Alabama. It takes about two weeks for it to get to my son’s account. That’s the slow boat to China.”

Adryann Glenn saw JPay’s services arrive in the Virginia DOC just two months before he was released from state prison. “People used to send a money order directly to the institution and it took 2-3 days to get into your account. After JPay [started] it took 7-14 days before the money got credited,” he said. The reason was obvious to Glenn: “JPay doesn’t really want your money order. They want you to use the money transfer.”

The vendors aren’t the only ones making a profit from these fees. It’s common practice for these companies to send a cut of the collected fees directly to the prison agencies and jails. These “commissions,” essentially legalized kickbacks, make money transfers and other fee-generating services a reliable profit engine for the corrections agencies themselves.

“These companies compete not by offering the best product to the people who use them,” said Carl Takei of the ACLU, “but by offering the biggest commission to [the agencies] that sign the contracts.”

Under JPay’s contract with the Florida DOC the agency receives a fixed commission of $2.50 for every money transfer. JPay’s agreement with the Indiana DOC actually stipulates a minimum of $100,000 in guaranteed annual commission payments to the prison agency. This is essentially found money for corrections departments that are often faced with staffing shortages and budget cuts in a country with the world’s highest incarceration rate. “But,” notes Takei, “if we’re incarcerating so many people that the prisons ... are unable to finance that incarceration without funding it on the backs of prisoners’ families then there’s something wrong with the system.”