The percentage of people required to pay bail for their release from jail has increased significantly from 37 percent in 1990 to 61 percent in 2015. According to the Prison Policy Initiative, the for-profit bail industry collects $1.4 billion in nonrefundable fees from defendants and and their families. Bail bond companies work to actively block reforms that affect profits, including reforms that would prevent people from being detained in jail because they cannot afford bail.
What is Bail?
When a person is arrested, a court may determine to release them while the case proceeds, under conditions set for the release. One common condition is money bail. In 2015, the median bail in the United States was set at $25,000. Money bail acts as a deterrent for the individual to skip out on following court appearances. If the bail is paid directly to the court and the person is eventually found not guilty of the crime, the money is returned to that individual.
If the person cannot pay the full bail amount, they might be made to stay in jail for as long as it takes for the case to clear the system, which could take weeks or years, in such cases, the person’s chances of being found guilty increase significantly. In New York, one study found that a person’s likelihood of being found guilty of a crime increased from 52 to 94 percent if they remained in jail during the process. Alternatively, the person can have a for-profit bail bonds company pay the bail.
For-profit bail companies typically require the arrested individual to pay ten percent of the total bail. If unable to pay that amount, the bail company will set up a payment plan. Unlike directly paying the courts, if the arrested individual is found not guilty, they are still required to continue paying the for-profit bail company.
According to a 2017 ACLU report, a typical contract signed between a for-profit bail company and the arrested individual also includes provisions that allow the bail bonds company to conduct searches without warrants, vehicle tracking, and digital surveillance. The person submits to covering all of the costs associated with the bail. There are many reports of extortion, sexual coercion, and corruption of bail bondsmen. In 2017, the Southern Poverty Law Center sued four bail bonds agencies in New Orleans for “abusive and exploitative actions,” including kidnapping and extortion. In Washington, a bondsman was sued for shooting the mother of an arrested individual. In West Virginia and North Carolina, several bondsmen were arrested and charged with sexual assault.
Insurance Companies Back Bail Bond Companies
For-profit bail companies are backed by insurance companies. According to the ACLU, bail is a type of surety bond, which is different than other types of insurances, like car or home insurance. Surety bonds guarantee to a third party, in this case the courts, that the person seeking bail, the defendant, would appear in court. In case the defendant does not appear in court, a surety bond relieves the insurance company of any responsibility, requiring the defendant, or his or her family, to cover all costs.
When a person signs with a for-profit bail company, the bail agents pay a percentage of the premium they charge, typically 10%, to an insurance company. Insurance companies, indemnified of any responsibility, make money without the risk of paying bail. In 2013, Allegheny Casualty, International Fidelity, and Associated Bond (AIA), a privately-owned bail insurance company, reported that throughout the insurance company’s 107 year history, they have not paid for bail once. Bail insurers have also stated that losses are not necessarily losses, but “that losses are mostly a timing issue and are usually recouped."
Bail Regulations and Reform
In 2014, a report issued by the New Jersey State Commission of Investigation stated that “the [bail] system is dominated by an amalgam of private entrepreneurs who profit from the process but are subject to weak controls easily manipulated or ignored with little or no consequence.” The report, which referred to the regulation of the bail industry as “diminished and archaic,” led to sweeping bail reform in New Jersey. In January 2017, New Jersey introduced new regulations that virtually eliminate money bail. According to the Pretrial Justice Initiative, which ranked New Jersey with an “A” on pretrial justice in November 2017, the number of people in jails in New Jersey had decreased by over twenty percent.
In May 2017, California lawmakers introduced legislation to ensure pretrial detainees were not in jail solely because they were unable to pay their bail. The legislation was introduced after California Department of Insurance arrested thirty bail agents from seven bail agencies for corruption, illegal business practices, and illegal solicitation in 2015.
There is also reform underway in Colorado, Virginia, Delaware, West Virginia, and Hawaii. Each state introducing legislation to limit the use of money bail for defendants who are not considered a threat. Illinois, Kentucky, Oregon, and Wisconsin do not allow for-profit bail companies. In 2005, Oregon introduced an automated reminder system and the failure-to-appear incidents decreased by 31 percent and saved over $155 million each year. At the same time, one county in Colorado started calling defendants to remind them of court dates, bringing the failure-to-appear incidents down to eight percent.
The reform taking place is also being met with heavy pushback from the bail industry. In 1992, the for-profit bail industry formed the American Bail Coalition (ABC). ABC is a member of the American Legislative Exchange Council (ALEC). ALEC is organization of public and private sector representatives who draft legislation. ALEC has drafted many tough-on-crime bills that have resulted in more profits from the prison industry.
The ABC has referred to ALEC as a “life preserver.” ALEC and ABC have introduced laws in at least fourteen states, promoting and passing twelve between 2005 and 2010. These laws include expanding the list of crimes that require the defendant to post bail and introducing post-conviction bond laws. Additionally, ABC and ALEC have also passed laws that have helped bail agencies avoid paying debts. In 2016, the ABC Board Chair served as the ALEC Private Enterprise Advisory Council Chairman.
In Florida, after ABC donated to the county commissioners, one county cut pretrial alternatives to bail. In Connecticut, where reform was underway, ABC was able to stop the government from eliminating bail for misdemeanors. In New Jersey, “Dog the Bounty Hunter,” a bail bondsmen who had a television show on A&E, is suing Governor Chris Christie for the bail reform, which “Dog” argues caused the death of a New Jersey resident.
Immigrant Bail Bonds
In 2016, the ACLU filed a class -action lawsuit against the Department of Homeland Security and U.S. Immigration and Customs Enforcement (ICE) for setting excessive bonds for detained immigrants. Small private companies, such as Libre by Nexus, have taken advantage of these expensive bonds.
Libre by Nexus markets itself as helping detained immigrants by securing their bail bonds, which costs an upwards of $15,000. In exchange, immigrants are fitted with an electronic monitoring device, which they pay for in monthly installments of about $500. Since launching in 2013, business for Libre by Nexus has grown, in part due to ICE’s detention of higher rates of immigrants and raise in detainees’ bonds.
The main companies involved in this sector
In 2015, for-profit bail companies posted $14 billion in bail. According to the same ACLU report, there are nearly 30,000 bail agencies in the U.S., as of November 2016. These companies are mostly private, localized companies. There are nine insurance companies that back the majority of these for-profit bail companies, including global insurance companies like Tokio Marine and Fairfax. There are also private insurance companies, such as American Surety Company and AIA.
- Accredited Surety and Casualty Company, Inc., subsidiary of Randall & Quilter Investment Holdings Ltd., of Hamilton, Bermuda (LSE: RQIH)
- Fairfax Financial Holdings Limited, of Ontario, Canada (TSX: FFH)
- Tokio Marine Holdings, Inc., of Tokyo, Japan (TSE: 8766)
- American Surety Company, of Indianapolis, IN (Private)
- Allegheny Casualty, International Fidelity, and Associated Bond, of Calabasas, CA (Private)
- Bankers Financial Corporation, of St. Petersburg, FL (Private)
- Endeavour Capital, of Portland, OR (Private)
- Lexington National Insurance Corporation, of Baltimore, MD (Private)
- Libre by Nexus, of Harrisonburg, VA (Private)