Most people spend very little time thinking about bail bondsmen —up until the moment a loved one lands in jail. When a friend or family member is arrested and charged with a crime, a bail bond agent can seem like the most valuable person in the world. In Iowa, a few hundred dollars paid to a bail bond agent at the right time can sometimes help secure a loved one’s freedom.
Although all consumers hope they will never have to buy a bail bond, nationwide, the bail bond industry collects about $2 billion each year. In the cash bail system, where money secures freedom, some bail bond agents will go to great lengths to collect their profits. Consumers should know the risks of bail bond agreements. Consumers should also know their rights when things go wrong.
How Bail Bonds Work
When a person is charged with a crime and held in jail, courts have several options to release them while also encouraging them to appear for court. Courts will sometimes release criminal defendants on “their own recognizance,” which means that they don’t have to pay any money to ensure they actually appear later for hearings. Sometimes the court does not make the person pay money, but does require the person to be under the supervision of a pretrial probation officer.
Courts can also set a cash bail amount for an individual’s pretrial release. Bail amounts vary based on a wide range of factors but are often set between $500 and $20,000. When cash bail is set, the person’s friends or family may post the entire amount of the bail. This will result in a total refund at the end of the criminal case if the person follows their pretrial release requirements (showing up for hearings, don’t get into more trouble, check-in with pretrial supervision, etc.)
More often, however, friends or family will make an agreement to pay a percentage of the bail amount — typically 10 to 12 percent — to a bail bond agent, in exchange for the defendant’s release from jail. For example, if a court sets bail at $10,000, a bail bond agent will typically require a $1,000 payment. This payment is called a premium. This bail bond premium will not be refunded.
Bail bonds are a form of insurance called a surety. In a bail bond surety agreement, the bail bond agent insures to the court that the person will appear. The premium you pay them is like any other insurance premium, and is supposed to be a payment to offset the risk that the person will not follow their pretrial requirements.
Bail Bond Premium Financing
Cash bail bonds are often financed, allowing individuals to pay the premium in installments. With cash bail bonds, premium financing often requires some type of collateral, such as a car or a house. The person who signs the bail bond surety agreement, or a cosignor, may agree to post their vehicle as collateral in exchange for the ability to make premium payments in installments.
Risks of Dealing with Bail Bond Agents
Consumers who are desperate to get a loved one out of jail may not always consider the risks of dealing with a bail bond agent. Cash bail transactions can pose two types of problems. First, a premium financing agreement may be written poorly or contain unfavorable terms for the consumer, such as weekly premium payments or expensive additional fees. Second, bail bond agents sometimes engage in predatory practices to collect their debts. A bail bond agent looking to collect a debt may repossess a vehicle in the middle of the night, send threatening messages, or even detain an individual and return him to jail. Many of these actions may be against the law.
Consumer Protections Against the Bail Bond Industry
Across the country, bail bond agents face an increasing number of lawsuits for predatory business practices. Although Iowa law does not specifically regulate bail bond agents, other existing laws can provide Iowans with strong protections against these predatory practices.
The Iowa Consumer Credit Code (ICCC) regulates consumer credit transactions by ensuring that businesses follow a set of standard procedures. If the procedures are not followed, the business may be liable for money damages.
When a bail bond agent who regularly sells cash bail bonds enters into a premium financing agreement with an Iowa consumer, the ICCC is likely to apply. Bail bond agents may violate the ICCC if their agreements do not include important disclosures, such as a notice to cosigners that they will be obligated on the debt.
Bail bond agents may also violate the ICCC by failing to provide a notice to cure an alleged violation of the agreement. For example, if a consumer provides a vehicle title as collateral for a financed bail bond, then misses a payment, the bail bond agent cannot repossess the vehicle without giving the consumer proper written notice and an opportunity to cure the debt.
The ICCC is just one example of a law that applies to bail bond agents. Other consumer protection laws may also apply, depending on the transaction or collection method employed by the bail bond agent.
If you have been sued or a confession of judgment has been filed
Other than repossessing a vehicle taken as collateral, bail bond agents may sue you. There are two types of bail bond lawsuits. The first is for “forfeiture.” This means that the person did not follow the terms of their agreement, and so the bail bond agent or the company that backs them has to pay the court. The bail bond agent then comes after the person and their cosignors to pay them back for what they paid the court. These lawsuits may be for money, or in some cases foreclosure if you gave the bail bond agent a mortgage on a property.
The second type of lawsuit is based on recovering the “financed premium,” i.e. the bond premium that was paid in installments.
Sometimes, bail bond agents will file something called a “confession of judgment.” This is the civil version of a criminal confession. If you sign this, the other side can file it with the court as a judgment. The usual steps — such as notifying you and giving you a chance to tell the judge your side of the story — don’t happen. There is some question as to whether confessions of judgment in Iowa are constitutional in most cases. In addition, anything that would make a criminal confession invalid — i.e. a confession that was in any way not “knowing, intelligent, or voluntary” — would also make a confession of judgment invalid and subject to challenge.
In any of these cases, you may have claims or defenses if the following things are true:
- The cosignors did not get certain written disclosures required by law
- The contract contains illegal provisions
- If the premium rate is higher than the legal limit (generally 10% of bail)
- Any illegal repossessions (see this article)
- For financed premium cases…
- If the interest rate is too high;
- If the bond agent doesn’t accurately tell you the cost of credit;
- If there is generally any deception or unfair elements;
How to Protect Yourself and Others Against Abusive Bail Bond Practices
If you feel like a bail bond agent has behaved badly or taken advantage of you or someone you know, you may have legal options. Contact a consumer protection lawyer. To report an abusive bail bond practice, contact the Consumer Protection Division of the Iowa Attorney General’s Office at 1-888-777-4590, or the Iowa Insurance Commissioner at (515) 281-5705.