Fintech FRSH offers a banking solution for former prisoners

• FRSH is a banking solution for the formerly imprisoned community.
• The co-founders, Topeka Sam, Daniel Feldman and Chris Heckler were all previously incarcerated.
• “We’re driven by justice and we know this is the best solution,” Sam told Insider.

Establishing financial stability is an uphill battle for many people in the United States.

However, one group faces constant obstacles in the form of discrimination and legal barriers despite paying their debt to society: formerly incarcerated people.

Topeka Sam, co-founder and visionary CEO of fintech startup FRSH, told Insider that “no matter how much you do, no matter what you prove, and no matter how you’ve been forgiven,” you’re still going to be discriminated against.

FRSH aims to change that. FRSH offers banking products and services to help returning citizens — those who have been released from jails and prisons, according to the U.S. Department of Justice — establish financial stability. Sam, Daniel Feldman and Chris Heckler, all formerly incarcerated, founded the fintech.

“We’re different than other banking or fintech platforms, and that’s because of the community we serve and the community we’re a part of,” said Sam. “It’s not just that we’re saying, ‘Here’s a great solution for people who have been in prison or have been affected by justice.’

“Justice affected” broadly refers to anyone affected by the justice system, such as those who have been incarcerated and those involved in child welfare cases, domestic abuse cases, and drug courts, among other circumstances.

FRSH partners with prisons, probation and parole offices, community-based organizations and workforce development agencies. The start-up also trains case managers and case managers to teach financial education courses and offer FRSH as a banking solution for returning citizens.

Fintech, which works with Metropolitan Commercial Bank, provides the user with a current account and a debit card. Metropolitan Commercial Bank did not respond to multiple requests for comment. FRSH also provides health benefits through a partnership with Parks Insurance.

FRSH has a post-money valuation of $10 million. It raised $650,000 in its pre-seed round in September 2021 from angel investors and Dream.org, a nonprofit that focuses in part on mass incarceration. The startup has raised over $1 million to date and is currently raising a seed round.

The startup had 1,200 users during beta and officially launched in April.

“We decided to create a solution ourselves”

After Sam was released from prison, her conviction prevented her from signing a commercial loan for a real estate development project despite receiving a full presidential pardon in 2020.

“How do you tell me I can’t be part of a loan when I have a good credit score, I have income, I own other property and I’ve had other loans?” Sam said.

According to the Department of Justice, in the United States, over 700,000 individuals are released from prisons and jails each year. But the formerly imprisoned face legal barriers when re-entering society in addition to stigma and discrimination.

Getting a loan is difficult even if someone is only charged with, but not convicted of, a crime. Loan applications that ask if a person has ever been “charged” with a crime violate fair lending laws by discouraging applicants from applying and causing a “disparate impact based on race,” according to the National Community Reinvestment Coalition.

From a personal-financial perspective, these barriers prevent you from participating meaningfully in the economy, Feldman, a co-founder and CEO of FRSH, told Insider.

When a person goes to prison, they often cannot close their accounts, close their cards or cancel subscriptions in advance. So their accounts often go into the red and their debts are sent to collections, Feldman said. And because of ChexSystems, the reporting agency banks use across the country, a returning citizen can’t open a new account with another bank until they repay the debt on the old account, he added.

Instead, returning citizens often choose to use checkpoints and take out payday loans, which can accumulate exorbitant interest and fees and create a cycle of debt for the borrower.

“When we didn’t see that solution and we fell victim to discriminatory and predatory practices, we decided to create a solution ourselves,” Sam said.

FRSH only requires a user’s social security number, name and address to register, but it takes longer to onboard users than it does with other fintechs.

“Because this is our demographic, we have to make sure they can come in without a government-issued ID,” Feldman said. “But that means we’re probably going to do some additional sanity checks, IP address checks, to validate for security purposes.”

Onboarding with FRSH can take anywhere from three to seven days, but a person’s criminal background is never a reason someone will be denied, Feldman said.

FRSH is free for the user. Fintech earns from brokerage fees and is able to provide health benefits through a government subsidy under the Affordable Care Act. Looking ahead, Feldman said FRSH plans to offer a credit building tool by the end of the year.

“Companies say they are expanding with funds for diversity, equity and inclusion,” Sam said. “But a lot of times it’s the culture of the people and their own personal biases that cause these gaps of unbanked, underbanked, unemployed and unhoused people.”

“So banking is one thing, but then you have work, you have education, you have housing – all of these where people are insecure because of discriminatory practices around people of conviction,” she said.