Bail Bonds

When an individual is arrested, a court can determine to release them under certain conditions while they await trial. Cash bail is a common condition for pretrial release in the U.S. The cash bail system functions by requiring defendants to pay a certain amount of money to the court as a pledged guarantee to appear in front of a judge—or risk losing this money for failing to do so. If bail is paid directly to the court, then the amount paid is returned at the end of the court proceedings. However, more than 60% of defendants are detained pretrial because they cannot afford to post bail. Additionally, racial disparities in bail determinations abound, compounding the already-existing racial disparities in arrests and charges within the criminal punishment system. There are also gendered consequences of money bail: Incarcerated women are less likely than men to be able to afford cash bail.

As the majority of individuals cannot afford to post bail, they are often forced to seek a for-profit bail bond company to post bail on their behalf. For-profit bail companies typically require arrested individuals to pay 10% of their total bail. However, unlike those who directly pay bail to the court, arrested individuals who have posted bail via a for-profit bail company are not reimbursed—and must continue paying said company—if they are found not guilty.

If an individual cannot pay the full bail amount directly to the court or does not post bail via a for-profit bail bond company, then they will remain in jail for as long as it takes for their case to be cleared. This process can take months or even years. Defendants incarcerated prior to trial who are unable to afford bail statistically receive harsher and longer sentences due to resulting difficulties with engaging legal counsel throughout their trial and being pressures into accepting plea deals in order to secure their release. A 2013 study by the Arnold Foundation found that defendants in long-term pretrial detention were three to four times more likely to receive a jail or prison sentence, and that their sentences were two to three times longer than those of defendants who were not incarcerated throughout their trial. As pretrial detention is the biggest determinant of convictions, for-profit bonds essentially create separate legal systems for the rich and poor.

For-profit bail also robs individuals and their families of privacy and individual rights. According to a 2017 ACLU report, a typical contract signed between a for-profit bail company and an arrested individual includes provisions that allow the company to conduct warrantless searches, vehicle-tracking, and digital surveillance. Bail bond agents and "bounty hunters" have also routinely engaged in extortion, sexual coercion, and corruption. In 2017 alone, the Southern Poverty Law Center sued four bail bond 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, and in West Virginia and North Carolina, several bondsmen were arrested and charged with sexual assault.

Internationally, for-profit bail is considered a highly unethical and predatory practice. In fact, the Philippines and the U.S. are the only two countries in which for-profit bail is legal. In Canada, selling private bail bonds carries a sentence of two years in prison. In Australia, a government commission rejected the idea of implementing commercial bail, in part because "it lends itself to abuses such as collusive ties between bondsmen and organized crime or police, lawyers, and court officials."

While the thousands of localized bail bond agencies are the most visible profiteers within the for-profit bail industry, a small number of insurance companies are essential in providing the industry with financial backing. In a 2017 ACLU report, nine insurance companies were identified as covering "the vast majority of the estimated $14 billion in bond posted by the for-profit bail industry each year." In most states—and at the federal level—bail bond agencies are legally required to insure their bonds in order to guarantee payment to the court as a last resort, thereby necessitating insurance companies' presence in the industry.

Bail bond insurance is unique in the insurance business in that it incurs virtually no risk of loss. Insurance companies have shaped the rules of the industry in order to ensure that they will not have to pya the cost of any violated bail bonds. For example, AIA (Allegheny Casualty, International Fidelity, and Associated Bond), one of the largest bail insurance companies, reported "no losses in 2015 and 2014." In 2013, AIA's chief legal officer told a reporter that, in the company's 107-year history, it never paid a single bail loss. Bail insurers have also stated that recorded losses "are mostly a timing issue and are usually recouped."

Due to increasing public outcry over the bail industry, a number of states have enacted legislation that bans or strictly limits cash bail. As the cash bail industry becomes less profitable as a result, several companies have divested from their bail businesses.

In March 2019, R&Q Accredited subsidiary Accredited Surety and Casualty Company, one of the largest bail bond insurance companies in the U.S., sold its bail business to Fairfax Financial Holdings. In 2014, Accredited Surety and Casualty Company underwrote 200,000 bail bonds for over 1,600 bail agents in 49 U.S. states, and was ranked number three in the nation by the Surety & Fidelity Association of America based on the face amount of bail bonds underwritten.

One month later, Tokio Marine Holdings, identified in a 2017 ACLU report as the largest insurer in the U.S. bal bond industry, announced that it would exit the industry by selling its bail bond subsidiaries—American Contractors Indemnity Company, Bail USA, United States Surety, and U.S. Specialty Insurance—to an "undisclosed buyer." According to Fairfax's website, the company acquired Bail USA from Toko Marine Holdings in April 2019.

In March 2020, Endeavour Capital, a private equity firm, exited the bail industry through its sale of Aladdin Bail Bonds, one of the largest bail bond companies in the U.S. The sale followed an ACLU and Color of Change campaign targeting Endeavour and its investors.

Despite increasing bail reform efforts in the U.S., legislation has been met with intense pushback from the bail industry, particularly by the American Bail Coalition (ABC). Founded in 1992, the ABC—a coalition of for-profit bail insurance companies—works to maintain the legality and viability of the for-profit bail industry. The ABC effectively lobbies politicians and drafts legislation through its membership in the American Legislative Exchange Council (ALEC), a conservative organization that brings corporations and state legislators together to create and lobby business-friendly legislation. In 2011, leaked documented revealed that roughly 1,000 ALEC-drafted bills are introduced in state legislatures each year.

The ABC has referred to ALEC as its "life preserver." In 2016, the ABC's Senior Legal Counsel served as ALEC's Private Enterprise Advisory Council Chairman. Bail legislation drafted by ALEC has included expanding the range of crimes that requires posting money bail, loosening regulations on bail bondsmen, and restricting pretrial alternatives to bail. Since the ABC formed in 1992, the use of money bail has increased dramatically. Between 1990 and 2009, the percentage of pretrial releases secured via cash bail has increased from 24% to 49%.

An immigration bond is a monetary payment that secures the release of a detained person from the custody of Immigration and Customs Enforcement (ICE) on the condition that the released individual attends their court appearances and complies with the orders of an immigration judge. The ability to obtain a bond greatly impacts the likelihood that an individual will obtain immigration relief or receive asylum. Detained immigrants are five times less likely than non-detained immigrants to acquire legal counsel, and data consistently show that immigrants with legal counsel are more likely to obtain immigration relief than those without. Immigrants in detention have a difficult time finding legal representation due to communication barriers with the external world and the shortage of attorneys willing to represent them. Detained immigrants also have less time to prepare their legal defenses, as their cases are fast-tracked in immigration court.

Detained immigrants who are granted bail release but cannot afford cash payment can be bonded out through a surety bond. As with the traditional bail bond industry, immigrant bond agencies require insurance companies to underwrite bonds and guarantee to ICE that the full value of the bond will be paid if an individual does not fulfill their obligations of the bond. Surety bond contracts are struck between the Department of Homeland Security (DHS), a specific type of insurance firm called a "surety company," a bail agent, and a co-signer who is typically a family member or friend of the detained individual. The surety company underwrites the bond and shares liability with an immigration bail agent, who liaises with communities and posts bond on the surety company's behalf. The surety company and bail agent guarantee to DHS that the detained individual will make court appearances and pledge to pay the full bond amount, plus interest and penalties if the terms of the bond and release are breached. In return, the co-signer typically pays the surety company and bail agent a 15% to 20% non-refundable premium; posts collateral in the form of property or credit card balances; and assumes responsibility for ensuring that the formerly detained individual appears in court. Most surety contracts also stipulate that the co-signer will pay the full bond amount if the formerly detained individual violates the terms of release. Hence, under the surety bond system, it is the family and friends of detained individuals—not the surety company or bail agent—who assume most of the monetary risk.

The immigrant bail bond industry is much smaller than that of the non-immigration criminal punishment system. Immigration bail bonds are considered riskier than criminal bail bonds, and bail agents typically need additional insurance and licensing to underwrite immigration bonds. There are several companies that specialize in immigration bonds that operate on a national level, including Action Immigration Bonds, Gonzales and Gonzales, Libre by Nexus, and Statewide Bonding. There is some indication that the immigration bail bond industry is poised for growth: As some states push to ban or heavily curtail cash bail within the criminal punishment system, traditional bail bond companies at the local and state levels are venturing into the immigrant bail bond industry.

One of the companies that best exemplifies the problems inherent to the immigrant bail bond industry is Libre by Nexus. Libre by Nexus is not a bail bond agency or surety insurer itself, but rather an intermediary profiteer in the system. The company directly targets individuals detained by ICE and offers to secure their bonds through certified bail bond agencies. Instead of requiring detained individuals to post collateral, such as cash or property (as is commonly required by non-immigration jail bonds), Libre by Nexus requires payment of up to $420 per month for an electronic monitoring or "e-carceration" device that monitors an individual's movements 24/7. Compared to the cash bail bonds that ICE requires to be paid in full, Libre's monthly fees offer an alternative to desperate individuals and their families. On top of paying monthly fees, monitored immigrants must pay a series of non-refundable installation, processing, and security deposit fees that can add up to $4,000. None of these fees or monthly rental costs are directed toward paying off an individual's bond. If an individual fails to pay these fees or "breaks the contract" in any way, Libre by Nexus will prompt "licensed recovery agents" (i.e., bounty hunters or ICE agents) to return them to detention. In 2020, the company agreed to pay $425,000 to settle an inquiry by the Virginia Bureau of Insurance, which claimed that Libre had acted as an unlicensed insurance agent. As part of the settlement, the company's ability to collect monthly fees in exchange for bonding immigrants out of detention centers was curtailed. As of 2020, Libre by Nexus was under investigation by at least nine state or federal agencies, including the U.S. Department of Justice, and faced numerous lawsuits alleging that the company "prey[ed] on detainees' vulnerability...to foist crushing financial terms and GPS shackles on [them]."