Tips & Facts

How ICS Providers Avoid Paying Interstate Commissions

Have you ever actually tried to read an Inmate Phones contract? It’s about as easy as opening a clam with your bare hands. Generally speaking, U.S. contract law is not meant to be understood by the average person (or person, really), but whenever a large amount of money is at stake, the legalese is bound to be even muddier. For correctional facilities, this can mean losing out on thousands of dollars due to small, seemingly innocuous, but confusing clauses. For example, how would you interpret the following contract provision regarding interstate calling?

*Notwithstanding anything to the contrary contained in the Agreement, In accordance with Federal Communications Commission 47 CFR Part 64 [WC Docket No. 12-375; FCC13-113] – Rates for Interstate Calling Services – effective February 11, 2014, no commission shall be paid on revenues earned through the completion of Interstate calls of any type placed from the Facility(s).”

So what do you think? Would it be reasonable to conclude that an FCC ruling exists that prevents commissions from being paid on interstate calls? It would certainly seem so.

This is an actual clause that’s been included in hundreds of inmate phone contracts, and is still widely used by many major ICS providers. It has also cost county jails nationwide countless dollars in lost commissions. And that’s a shame, considering it basically means “We’re not paying you because we don’t want to.”

Let’s look a little closer to see if the FCC Ruling itself might shed some light here. The FCC did in fact take action to limit rates for interstate calling services, and that action was dated effective February 11, 2014, but nowhere in that ruling (and I do mean nowhere) did the FCC take any action directly against commissions being paid for the interstate call type. (You can download the ruling here).

It’s just not true that the FCC prevents Inmate Phone Companies from paying commissions on interstate call revenue. The FCC has stated that “site commissions do not constitute a legitimate cost to the providers of providing ICS,” but that’s an entirely different assertion. (The exact wording comes from this 2016 FCC rule).

Legitimate costs can be passed through without markup to the end consumer — credit card transaction fees are a great example. But because ICS providers can’t pass their commission payments through like other legitimate costs, some providers use the FCC ruling as an excuse for not paying interstate commissions at all.

And that would be okay, if these ICS providers were honest about what they are doing. Instead, they try to fool the County by framing this negotiable topic as predetermined by the FCC. Maybe you’ve heard this line before: “Sorry Sheriff, we can’t pay you an interstate commission because the FCC won’t let us.”

In reality, your providers are really saying: “We’d rather keep all this interstate call revenue for ourselves.” They’re just using the FCC as a scapegoat.

Here’s the bottom line. The FCC won’t let ICS providers charge more than $0.21 per minute on interstate debit/prepaid calls, and commissions on those calls can’t be passed through to the end-consumer. If your ICS provider isn’t efficient enough to make a profit under these circumstances (or if they just don’t want to share any of the revenue with you), maybe it’s time to renegotiate your agreement — or find a provider that pays you a fair commission on true gross billed revenue.