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California Bail Bonds Lawsuit Filed; Enforcing Cartel Pricing

On Tuesday, January 28, 2018, bail bond customers filed an antitrust lawsuit against bail companies in California. Here’s what we know about the California Bail Bonds Lawsuit

The lawsuit, which was filed in Alameda County, alleges that the bail companies present in the state have been conspiring together to keep their interest rates undesirably higher in an effort to “enforce cartel pricing”.

As reported by the Los Angeles Times, the people involved in the lawsuit allege that they had to pay “maximum rates” to these bail bond companies, also called “sureties”, due to their resolve to not lower prices against each other. The claimants allege that this resolve stemmed out of a conspiracy to drive as much money from customers as possible.

The lawsuit comes shortly after a legislation to abolish money bail requirements was passed, and was then suddenly put on hold until a November 2020 referendum backed by surety companies where it currently awaits its fate. As a first legislation of its kind in the country, the law intends to do away with the Golden State’s notoriously expensive money bail requirements – that is, if it’s passed. It originates from the observation that more poorer criminal defendants have to serve time in jail for not being able to post bail money; while richer criminal defendants can walk due to their excess resources.

But before looking at the lawsuit and the relevant legislation, let’s take a look at how the bail bonds process with these sureties really works.

How Do Bail Companies or Sureties Work?

In California and various other states, judges can set certain requirements for bail money. This allows criminal defendants to be released on bail between their hearings, provided that they arrange for the specified money.

The bail money usually ranges around a few thousand dollars. In some cases, it can go up to a few hundred thousand or even millions of dollars.

This bail money acts as a guarantee that the individual wouldn’t go on the lam or skip their court hearings.

But it is so often the case that a criminal defendant or their family cannot afford the bail money that the court sets for their release. If anyone fails to post the required bail money, they await their trial in jail. Needless to say, to avoid this bleak situation, the families or friends of criminal defendants seek out the help of sureties to keep their loved ones out of jail.

Sureties in California are usually located near county courthouses, where they offer bail bonds to people who cannot afford to arrange the bail money often required by court.

These sureties offer these people a chance to arrange that bail money in the form of bail bonds. In return for their services, they charge an interest rate to these individuals.

Here are a few points to remember regarding the process of buying bail bonds from sureties.

  • These sureties offer the bail money against interest rates that they set themselves.
  • The interest rate is set around 10 percent or less.
  • This bail money is offered in the form of bail bonds.
  • The people who are in the need to post bail for their family members or friends buy these bail bonds at the mentioned interest rate.
  • They people buying bail bonds don’t have to pay the full bail money, but just pay the mentioned interest rate. For instance, if the bail bond is $5,000, then the bail bond interest rate at 10 percent would be $500. This is the money that the individual buying the bail bond would need to pay as a whole.
  • The surety then pays the full amount of bail to the court on the defendant’s behalf.
  • As a result, the criminal defendant gets released on bail.
  • When the criminal defendant appears in court and a verdict is passed, their bail money in full is returned to the surety.
  • The surety also keeps the amount paid in and the interest rate. For example, if the bail amount was $10,000 and the defendant’s family paid $1,000 to secure the bail bond, the surety not only gets its original $10,000 back, but it also gets $1,000 for its services.

The Issue in California Bail Bonds

In California, the sureties have been charging the maximum 10 percent interest rate against their bail bonds. They don’t offer discounts, and they don’t offer any relief on their pricing across the board. The lawsuit alleges that more than 20 surety companies in California have been in on this internal resolve since 2004 to never charge less than the maximum interest rate.

The lawsuit alleges that instead of providing discounts or competitive prices, these sureties have ensured to keep their maximum interest rates in effect at all times. This means that if a defendant had a bail to post for $50,000, they or their friend or family member who obtained the bail bond had to pay $5,000 in non-refundable interest to these companies.

In cases where they were unable to repay the debt, the lawsuit alleges the buyers of these bail bonds have had to sell off their house or other property to make up for the money. This is one of the reasons why the lawsuit names these defenders in the form of sureties and agents, alleging that their drive to keep their interest rates sky high has adversely affected the ones who bought the bail bonds from them.

How is This Related to the Reform Legislation That’s Currently on Hold

Due to the criminal justice reform that was passed and then put on hold until the November 2020 elections as a referendum, sureties are already fighting for their hundred million-dollar future in the Golden State. They secured a November 2020 referendum to be held before the now-held legislation could pass into law.

In California, these sureties operate in a market that is estimated at around $500 million with over 3,000 bail agents with the domain. All of them would go out of a job if the law goes into effect and replaces the money bond system with a court assessment. That is where a court will decide on a criminal defendant’s record in whether to release them over their hearings or not. However, some activist groups have stated that this a permanent position to take which could throw even more people in jail. Black criminal defendants will be put under more scrutiny due to their unfair record.

The lawyers associated with the antitrust lawsuit have mentioned that they have been working on this lawsuit long before the legislation was passed in the senate.

We Will Have to Wait and Watch

The lawsuit currently has people from four public interest groups as its plaintiffs. Potentially, it could involve thousands of class action members whose cases could range between October 2011 to October 2015.

Officials from various sureties have denied these allegations, with some going on record to state that their policies to keep a standard interest rate.

But since the lawsuit has been filed only recently, more developments are likely to unfold as time presses on.

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