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Minnesota Commerce Department Reaches Sweeping Agreement to Reform State’s Bail Bond Industry

1/13/2016 11:14:04 AM

SAINT PAUL – Minnesota Commerce Commissioner Mike Rothman today announced a sweeping settlement with the bail bond industry to reform its business practices in the state.

The agreement follows a comprehensive three-year investigation of the industry’s practices in response to complaints about the failure of many bail bond agents to comply with Minnesota laws and court rules related to the solicitation, sale and handling of bail bonds.

Under Minnesota law, bail bonds are defined as a form of insurance and are subject to regulation by the Commerce Department. In addition, bail bond agents, agencies and sureties must receive approval from the State Court Administrator's Office before they conduct business with Minnesota district courts.

“This enforcement action was necessary because too many people in the bail bond industry thought they were in the Wild West and the rules didn’t apply to them,” said Rothman. “Bail bonds are a type of insurance. As with any insurance business, the people in the bail bond business need to obey the laws that protect consumers and ensure a fair marketplace. This isn’t reality TV. It’s the real thing”

The Commerce Department has entered into consent orders with all 21 insurance companies that provide surety bonds to the 41 bail bond agencies operating in Minnesota. In turn, the insurance companies will be responsible for supervising the actions of their contracted bail bond agencies and appointed bail bond agents, who must be licensed under Minnesota law as insurance producers.

Bail is the amount of money a defendant must post to be released from custody until trial.  When a judge sets bail, the accused may pay it in cash or use a bail bond agency to post a bond with the court. The accused typically must secure the bond with some type of collateral and pay a non-refundable fee equal to about 10 percent of the bail amount.

Rothman said that in recent years, court and jail officials have complained about improper and illegal practices by bail bond agents. These included disruptive behavior in jail and court buildings, overzealous solicitation of business, payment of commissions to unlicensed individuals, failure to abide by approved rate schedules and offering rebates to customers.

“People enter courthouses on the most important, serious and difficult days of their lives,” said Minnesota State Court Administrator Jeff Shorba. “Preserving the dignity and solemnity of court proceedings is a critical step towards ensuring the fair and respectful treatment of citizens involved in our justice system. As State Court Administrator, I applaud the Department of Commerce and the bail bond industry for reaching this agreement, which will help ensure court business is conducted without disruption or improper activity.”

“It is in everyone’s interests to have an orderly environment in our jails and court buildings,” said Dakota County Sheriff Tim Leslie. “In the past, we have seen instances of unprofessional conduct and abusive sales practices by some people in the bail bond business. This industry-wide agreement with the Minnesota Commerce Department sets clear standards for everyone in the bail bond business that they must conduct themselves in a responsible, orderly manner that complies with all relevant state laws and court rules.”

“The bail bond industry performs an essential service not only for our clients and their families, but also for the justice system as a whole,” said Paul Roth, President of Whitecap Surety Company and Absolute Bail Bonds. “This settlement with the Minnesota Commerce Department will help ensure that the bail bond industry in Minnesota operates with the highest standards of professionalism and fair competition as we serve our clients and conduct our business in the state’s court system.”

Under the terms of the consent orders with the Commerce Department, the insurance companies, bail bond agencies and individual agents are required to charge only the filed rates for surety bonds. They must follow detailed procedures for documenting and handling the payments they receive, as well as the collateral they hold on behalf of customers.

In addition, the insurance companies, bail bond agencies and individual agents are prohibited from:

  • Soliciting business on the property of a court or jail;
  • Paying a fee or offering anything of value to a jailer, police officer, judge or public employee;
  • Providing a payment or rebate or promising anything of value to an individual who uses an agent’s services;
  • Paying a commission or fee to any person for selling, soliciting or negotiating a bail bond if that person is not properly licensed; or
  • Paying a commission or promising anything of value to an inmate for referring business.

Each surety insurance company must conduct an annual audit of its contracted bail bond agencies and their appointed agents to ensure compliance with state laws, court rules and the requirements of the consent order. Each company must also report the results of its annual audits to the Commerce Department.




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