The U.S. bail bonds system raises serious consumer protection concerns

> Posted by Allyse McGrath, Specialist, CFI

In a criminal justice system that accepts cash in exchange for temporary freedom, a predatory financial service has taken root and become yet another barrier. In the United States, bail bondsman and global insurance companies are netting between $1.4 billion and $2.4 billion annually from vulnerable people who are unable to pay the bail they need to remain out of custody before they are tried. This is not a new problem. It’s been going on since the early days of the modern U.S. criminal justice system.

Those accused of crimes are given an option to stay in jail or put up an amount of money (bail) for their release prior to trial. (It is important to note that people at this stage are presumed innocent under law.) The bail acts as a commitment device for people to show up to their court hearing. The bail amount is returned if the defendant shows up. If they do not, the court keeps it. Bail amounts vary greatly based on the severity of the crime in question as well as the potential flight risk of the accused party. The average bail amount for a felony arrest is about $10,000, roughly two months’ worth of the median annual income in the United States. In a study of nearly 30,000 cases where bail was set in New York City, only 37 percent of defendants could afford to pay bail.

Bail bondsmen provide a bond for people who are unable to pay the amount required but want to get out of jail prior to their court date. The bondsman pays the bail in exchange for a non-refundable payment of 10 percent of the full bail amount from the defendant. Once the defendant shows up in court, the bail bondsman receives the full payment back from the court, but the defendant is still on the hook for the non-refundable payment as well as any additional fees the bondsman has charged for services.

The United States has the highest incarceration rate in the world. In terms of pre-trial jailing, the country holds roughly 500,000 defendants in jail, which equates to about 153 pre-trial inmates for every 100,000 people in the population. This rate is substantially higher than that of other countries with populations above 10 million people. Canada and France, for example, each hold less than 50 people per 100,000 individuals in their respective countries.

Lurking behind these transactions is a system of risk sharing which places the burden on clients, through murky contracts and problematic client practices.

A 2017 report from the American Civil Liberties Union (ACLU) and Color of Change, a nonprofit civil rights advocacy organization, finds that the bail bonds business depends on large global insurance companies who provide the bondsmen with insurance cover against the risk that the defendant will not show up.

In order to limit their risks, bail bondsmen and the insurance companies backing them often lock people seeking bail and their families into invasive contracts. Often the contracts stipulate that those who receive bail bonds can be subject to invasive surveillance, such as searches without warrant and vehicle tracking. Additionally, defendants are regularly required to put up personal property such as vehicles or houses as collateral. In cases where the value of this property decreases, bail agents are permitted to re-arrest. Often bail agents hire bounty hunters, private contractors with little to no training, to do this work for them.

This practice was made famous by a reality television show called Dog the Bounty Hunter, which aired for 8 seasons on a well-known American cable network. The show documented the actions of Duane “Dog” Chapman, a bounty hunter paid by bondsmen to track down defendants who failed to show up to court. In searching for clips from the show online, you can find Chapman kicking down doors and fences and spraying pepper spray at those who he is out to “catch”.

Many of these practices violate the Client Protection Principles, which call for fair and respectful treatment of clients in the debt collection process. They also differ from those outlined in the Fair Debt Collection Practices Act, a federal law that outlines regulations for traditional credit products. In fact, the very practice of selling bail bonds is illegal in every country except for the United States and the Philippines. As are bounty hunters.

There is a spectrum of regulations on bounty hunters across states. In 18 states, there are virtually no statutory or administrative regulations on the practice. Some states regulate but don’t require bounty hunters to be licensed. In the case of Tennessee, bounty hunters don’t need a license but must undergo an eight-hour training each year from the Tennessee Association of Bail Agents.

Fortunately, bail reform is underway in most states, with several introducing new systems that use algorithms to assess flight risk instead of  bail-based systems. The commercial bounty hunter bail system is even banned in the four states of Illinois, Kentucky, Oregon, and Wisconsin. However, the bail bondsmen and insurance companies profiting from the current system are lobbying against reforms. The report from the ACLU and Color of Change states that the ten insurers that hold most of the market have built strong relationships with the American Legislative Exchange Council, a pro-privatization lobby, to maintain the system.

While complete reform may come slowly, regulation of the bail bonds industry and bounty hunters is urgently needed. Indeed, those accessing bail bonds should receive the same consumer protections as anyone else using financial services in the United States.

Image credit: Jeremy Brooks via Flickr

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