The Consumer Financial Protection Bureau announced Thursday it has instructed one of the largest prison service providers to pay $3 million to settle claims tied to the company's money transfer and telecommunications businesses, including a claim alleging it froze and drained incarcerated individuals' accounts.

In a consent order, Virginia-based Global Tel Link Corp. and two of its subsidiaries agreed to pay a $1 million fine to the CFPB and refund at least $2 million to consumers affected by money transfer practices that the agency described as variously unfair and abusive.

CFPB Director Rohit Chopra said in a statement that the company "took advantage of people who are incarcerated and their families, taking their money and preventing them from receiving money transfers needed to pay for basic necessities."

"People in correctional facilities, along with their family and friends, often have no choice whether to use these products and are exploited by companies that abuse their monopoly power to boost their own profits," Chopra added.

Global Tel Link, a company also known as GTL that does business under the ViaPath Technologies brand, contracts with jails and prisons to offer services that allow incarcerated people to place outside calls and receive funds for commissary purchases, such as food and clothing.

The company provides these services through subsidiaries including California-based Telmate LLC and Texas-based TouchPay Holdings LLC. Both subsidiaries were named as parties to the consent order.

Representatives of GTL did not immediately respond to a request for comment.

GTL, which the CFPB noted is often the sole money transfer and telecom provider for the correction facilities it serves, has generally had a "no-refunds" policy when moving funds into a person's commissary account on behalf of friends or family, according to the agency.

As a result, the CFPB said, when consumers tried to resolve errors like a duplicate or wayward money transfer, they have had few good options but to dispute the transaction through their payment card issuer. In some cases, consumers have even been instructed by GTL's customer service staff to initiate such a chargeback, the agency noted.

The problem, according to the regulator, is that GTL's practice has then been to block further card-funded transfers to the commissary accounts on the other end of these chargebacks. To get a freeze lifted, someone would have to repay GTL for the disputed amount.

The CFPB said the credit or debit card associated with a given chargeback would similarly be blocked from sending more money to other commissary accounts in the interim. And until 2021, an additional $25 fee applied, the agency added.

The consent order identifies this blocking practice as unfair, saying it harmed not only the incarcerated people whose commissary accounts were affected, but also their friends and family who had to pay off someone else's chargeback to remove a block.

"Consumers cannot reasonably avoid these harms because they did not file the chargebacks that triggered the account block, control whether another consumer files a chargeback after transferring funds to a trust/commissary account, or control [GTL's] account blocking practices," the CFPB said.

The order also addresses practices in the company's telecom arm, which offers certain so-called "unified accounts" that can be topped up by friends and family to pay for phone and video calls with incarcerated people.

From 2019 to 2023, the regulator noted, GTL had a policy of deeming accounts inactive if they sat idle for a certain number of months without any money coming in or going out. Once an account reached inactive status, GTL and Telmate would then withdraw and keep its remaining funds, according to the CFPB.

They did not, however, "adequately notify consumers of this policy and practice," the agency wrote. Certain online service terms didn't disclose this inactivity policy for some time, and consumers were typically not informed when their accounts were deemed inactive and emptied, the regulator said.

In fact, some consumers "first learned that GTL and Telmate had taken their funds and closed their account when they unsuccessfully tried to access the account and then called customer service," according to the CFPB.

The agency said this practice was abusive, resulting in roughly $4.2 million being taken from about 575,000 accounts. Affected consumers "not only lost their funds, but also lost the ability to communicate with their friends or family members during incarceration," the regulator said.

The consent order additionally faults GTL for other disclosure failures that the agency said were related to the fees the company charges for putting money in a commissary account.

The CFPB said that while consumers have been told about the fees they will be charged for a specific deposit, they were not given a "complete" schedule showing how these fees vary by deposit amount, method and channel. As a result, consumers may not realize when there are lower-fee options that could save them money, according to the agency.

Under the consent order, GTL must finish refunding consumers for any chargebacks they paid off but were not responsible for initiating, and it must return funds taken pursuant to its inactive account policy.

The order also imposes conduct restrictions on GTL and its subsidiary companies, prohibiting them from blocking commissary accounts over chargebacks and taking funds from inactive phone accounts. They must additionally "disclose complete money transfer fee schedules to consumers," the regulator said in its statement.

--Editing by Covey Son.