Prison Phone Services Provider Tacks on Fraudulent 'Tax' Charges: Class Action

Inmate Calling Solutions (ICSolutions) charged “junk fees” fraudulently itemized as a “tax” to inmates’ families for calls originating from prisons, alleged a class action Friday (docket 2:24-cv-02027) in U.S. District Court for Kansas in Kansas City.

ICSolutions “lies to its customers” when it itemizes charges to include a stated amount of tax, “knowing the amount collected and affirmatively represented as a ‘tax’ was higher than the authorized tax rate,” the complaint said. The practice is part of a “billion-dollar scam on American consumers,” it said, wrapping inflated tax fees, upcharges above fees paid to third parties and manufactured junk fees that don’t exist into the same category. Such practices “victimize Americans daily” and are used “solely to make money by cheating customers," the complaint said.

Telephone calls are subject to taxes levied at the location where the call originates, the complaint noted. In their conversations with incarcerated relatives in Kansas correctional facilities, plaintiff Vanessa Israelson of Kansas was charged a 20% "tax" rate and plaintiff Donna Levan of Kentucky, 40%, the complaint said. Screenshots showed Israelson was assessed a $4.96 “tax” on a call billed at $25 on Aug. 1. Levan was assessed a $6.60 “tax” on a call that was billed at $15 on Nov. 10.

A reasonable person would understand an item listed on a bill as a “tax” would be the amount assessed by and paid to the government on a transaction, said the complaint. But the tax assessed by ICSolutions was a “false amount, an inflated amount, and a charge secretly and deceptively used” as a profit center for itself, it said.

ICSolutions “misrepresented” stated amounts as tax “with the intent to deceive its customers and prevent them from discovering Defendant’s overcharging,” the complaint said. If the itemized amount said “junk fee” or “extra upcharge,” customers would have inquired, complained or refused to pay, but because fraudulent charges were listed as “tax,” ICSolutions “intended and expected customers would not question, complain or refuse,” it said. Many of the calls made by inmates using the defendant’s service are for legal reasons dealing with criminal proceedings, appeals and paroles, it said. Those calls aren’t excluded from the “overcharging scheme,” it said.

Legal counsel -- whether court appointed or serving public defenders’ offices -- must pay for the ability to converse with incarcerated clients in a “seriously underfunded” system, it said. Fraudulent, “padded” upcharging by ICSolutions’ scheme “harms the entire system, and harms the general public whose taxes are wasted," the complaint said.

Plaintiffs assert claims of breach of contract, unjust enrichment, fraud by present intent not to perform, and fraud and fraudulent/negligent misrepresentation and omission, it said. They seek punitive damages, disgorgement and restitution, plus legal expenses, it said. ICSolutions didn't comment Monday.