The Dog-Eat-Dog Bail Industry

Early in my research, I developed the crazy idea that bail agents might be willing to talk to me. Soon enough, this crazy idea became a reality. I began reaching out to bail agents and found them to be quite responsive. I met them wherever they were. Sometimes, that meant meeting them in the dimly lit back room of a local bail agency. Other times, it meant having a meeting in an agent’s elegant home, looking like it came right out of a Martha Stewart Living magazine (complete with a vintage pale-blue Corvette in the driveway).  I also met the demands of their busy schedules. One bail agent insisted upon multi-tasking during my interview, taking questions while on the phone with clients, whom he called “bro.” (Interesting conversation snippet: “Bro, don’t f*** up with me.”) Eventually, this agent had to cut our meeting short since he was slammed with work. As I exited this bail agency, slightly embarrassed and slightly offended, it all added up and hit me:  the bail industry is really competitive.

After all, there is a lot of money on the line. That pale-blue Corvette must be earned. Bail agents are paid through commission and have to hit monthly numbers. Every premium (the amount that is charged to a client) is split amongst the bail agency, the surety insurer, and the bail agent. Since 10% is the cap on premiums, a high volume of customers is one way to succeed as a bail agency. One way to achieve such high volume is to offer more flexible payment plans for clients. But doing this can make revenues go down because clients often default upon these plans. And in general, a high volume of clients is hard to achieve because of the fact that the number of bail agencies has increased over the years, creating a vast landscape of competition. Potential clients have a large number of bail agencies to choose from. The competitive nature of the bail industry and the money involved has even led some agents to turn to illegal bail practices.

It wasn’t always as competitive as it is now. One long-time bail agent told me that back in the 1970’s and 1980’s the different bail agencies were very cordial with each other. If two agents showed up to the court to post a bond, but then realized it was for the same client, they would work together to figure out who was called first.  Today, that sort of cooperation is hard to imagine. Almost all bail agents I talked to said that the bail business was fiercely competitive. In order to be a good bail agent, one had to be passionate, to love people and love what they do.  But they also had to have the motivation to work independently and bring in large volumes of business.

So how exactly do bail agencies compete with each other? In this post I will examine the four main ways: through location, advertisement, word of mouth, and discount rates. I think it is important to understand how exactly the bail bond industry operates, and how this affects our community, before we decide to make changes to the industry.

  1. Location, Location, Location

As I mentioned in my last post, the most successful bail agencies in Santa Clara County are located on North First Street in San Jose, California. This is prime bail agency real estate, since it is next to both the Santa Clara County Main Jail and the Santa Clara Hall of Justice.  In these locations, bail agents can quickly run over to the jail to post bond. In addition, loved ones of the newly incarcerated can easily walk to the closest bail agencies. Clearly, having a bail agency located near the jail is helpful. However, one bail agent I spoke with said that having an agency located on North First Street is less important than it was years ago, before the onset of the internet. Now, families can simply go onto their cell phones and Google different bail agencies. But even with all the changes in technology, the fact remains that the most successful bail agencies can all be seen on North First Street.

The location of bail agencies has not been without its rules and regulations. In 2011, the following San Jose Ordinance was passed: that bail bond establishments “must be at least two hundred feet from other bail bond establishments, and that they must be at least two hundred feet from real property zoned for residential uses or on which a public park or public or private kindergarten-twelfth grade school is located.” (San Jose Municipal Code 20.80.075).

The purpose of this ordinance was “to prevent adverse effects that can result from the concentration or clustering of such uses in close proximity to residential uses, and to retain business opportunities for uses other than bail bond establishments within close proximity to the Santa Clara County department of correction main jail complex.” (San Jose Municipal Code 20.80.070) In other words, the purpose was to prevent “unseemly characters” going in and out of bail agencies from being clustered together near impressionable children at parks and schools.

But according to the agents I spoke with, this purpose is at odds with the reality of the bail industry. Bail agents do not in fact deal with seedy characters. They hardly even see their incarcerated clients. Instead, they are really only working with friends and family members of those who are incarcerated. More often than not, these people are upstanding citizens (who will make great co-signors on bail contracts).

  1. Advertisements

Just like in any other industry, advertising plays a role in the competition between bail agencies. Some bail agencies emphasize advertising more than others. I am told that back in the 1970s and 80s, advertising in the Yellow Pages was important. Now, online advertisements are just as important. One bail agent I interviewed who works independently (and not for a bail agency) pays $800 per month on online advertising alone.

In Santa Clara County, no one does advertising quite like Bad Boys Bail Bonds.  They hand out lanyards and flyers at concerts and bars. Their slogan is fun and catchy: “Because your Momma wants you home!” and they have funny and memorable commercials on YouTube and TV. After interviewing agents there, even I left the office with a bunch of swag: a mug, pens, a tie, and a t-shirt. See one of their commercials below:

Bad Boys Bail Bonds even once had a $70,000 contract sponsoring the penalty box and ad space behind theBad Boys benches at San Jose Shark’s games. But in 2011, after only one hockey
season, Bad Boys Bail Bonds decided to end this contract. What followed was a letter from the Sharks stating that the founder Jeff Stanley and his family (pictured left at a Sharks game) could no longer wear their Bad Boys Bail Bonds t-shirts to Sharks games.  Stanley and his family were decade-long season-ticket holders and had been wearing their t-shirts to games for years. The letter sparked a controversy surrounding Stanley and his commercial free speech rights. Read the full story here.

Bad Boys Bail Bond has built a brand that has made them competitive.  But doing flashy advertising is not the only way to go. Another way that bail agents advertise is through posting small ads on signboards at the jail itself.  The Santa Clara Department of Corrections has a contract with the non-profit Jail Advertising Network (formerly known as Partners for a Safer America) to provide advertising services for bail agents and attorneys within jail facilities. Santa Clara County benefits from this arrangement, charging an advertising fee of $1,375.00 for a 4’’ x 6’’ ad on the 71 signboards that will be posted throughout two facilities. Here is the current Santa Clara County jail signboard:

Bail Signboard

This billboard system strikes me as odd in a few ways, and has an effect on the newly incarcerated community.

First, I am suspicious as to the “randomness” of the ads on this signboard. The Jail Advertising Network says it ensures impartiality and fairness through its “Random Ad Placement Program.” Advertisers enter into an online drawing for their locations on the signboards. Then, a computer generated algorithm “that cannot be manipulated by our organization or any other participants/stakeholders” picks the final advertisement slots. But how is it that Aladdin Bail Bonds, the most successful agency in Santa Clara County, just so happens to have the best ad spot on the signboard? They are in the top left corner, where the eye would first look, as if reading a book. Hmm.

Second, I am not quite sure this advertising is even legal. According to the California Code of Regulations, Bail agents shall not solicit “any person for bail in any prison, jail, or other place of detention of persons, court or public institution connected with the administration of justice; or in the halls or corridors adjacent thereto.” (10 CCR § 2074). Solicitation is defined in the California Insurance Code as:

“any written or printed presentation or advertising made by mail or other publication, or any oral presentation or advertising by means of telephone, radio, or television which implies that an individual is licensed under this chapter, and any activity in arranging for bail which results in remuneration to the individual conducting that activity.” (Cal Ins Code § 1800b).

 It would seem that the signboards would fall under this definition, and should therefore be banned from jails. This ban on solicitation in jails is also reiterated in the CA Penal Code, which says that

No bail licensee may employ, engage, solicit, pay, or promise any payment, compensation, consideration or thing of value to any person incarcerated in any prison, jail, or other place of detention for the purpose of that person soliciting bail on behalf of the licensee. A violation of this section is a misdemeanor.” (California Penal Code Section 160)

Clearly, the California Code of Regulations and the California Penal Code find it important to ban bail solicitation within jails, because the newly incarcerated may be scared and vulnerable. This might be their first time being arrested, and in their panic may agree do anything in order to get out of jail.  But aren’t advertisements plastered on walls just as capable of manipulating an arrestee? People are still in a highly vulnerable position, and could see posting bail as their only way out.

And third, all my suspicions aside, I think this method of advertising is quite simply misleading to newer inmates who know nothing about the possibility of being released on their Own Recognizance (OR). Someone who is going through the 8-hour booking process may not be aware that the judge may, at the recommendation of pre-trial services, let them out of jail on OR. The advertisements for bail agencies all around them may lead a person to believe that paying premiums to these agencies is the only way out. One recommendation for the Santa Clara County Department of Corrections would be for posters to be put up alongside these bail ads, telling those going through the booking process of their rights and that they could be released on OR without having to pay anything. Stay tuned on this blog for one of my fellow students to put together this helpful poster.

  1. Excellent Service and Word of Mouth

As fun and flashy as bail agency commercials are, one agent plainly told me that “commercials don’t work.” Many bail agents say that they rely on word of mouth in order to get clients. Word of an agency’s good service spreads. Some agencies are known to be more flexible in accommodating those clients that others do not take. Some have more flexible payment plans. Some bail agents also serve as a sort of helpful intermediary between the incarcerated and their families outside the jail, passing messages along to loved ones.  And some bail agencies get creative with their services. Bail Hotline Bail Bonds, for example, can get clients enrolled into certain rehab services upon their release from jail. Partnering with rehab services made sense after bail agents kept encountering reluctant co-signors who would prefer to have their loved ones “sober up” in jail.

But mainly, bail agencies have been trying to change their reputation from run-down offices with red neon signs to respectable businesses. On Bail Hotline’s website, their CEO Daniel McGuire describes the goals when his father started the agency:

“Our goals were simple: ‘change the image of the bail bonds industry, offer the consumer clear answers during a critical time of need, treat the consumer as you would a member of your own family, and offer payment plans to make bail affordable for all.’ That’s how we planned to differentiate our bail company from the competition.

Our first office was in downtown Riverside, CA. We got a great deal because the space was quite small and torn to pieces by the former occupant. We cleaned, painted, and decorated the office to look as nice as possible. As soon as we started, we made our clients feel comfortable and welcomed them with fresh coffee, snacks, and even a play area for the kids; nothing you would ever expect to see in a bail bond office, at that time.”

Snacks, coffee, and a play area for the kids? This is not what you would expect to see at a bail agency. But this change in image is what many agencies strive for. Bail Hotline Bail Bonds has even put an emphasis on social responsibility to the communities that they inhabit, donating bikes to children in need and doing a 1,000 backpack giveaway.

Bail agencies want a new reputation of professionalism. In an article about George Stahlman III, owner of King Stahlman Bail Bonds in San Diego, California says “Let’s get rid of the Tijuana whorehouse image of neon and people loitering about. Let’s clean up our appearance and do things by the book.” His father, who started the business, “tried to do a lot to upgrade the image, have people wear suits and ties, be professional on the phone and in our appearance.” In my visits with bail agencies, professionalism and a suit and tie seemed to be the norm.

Aside from professionalism and better service, bail agencies rely on attorney referrals for clients. Ironically, the reverse is illegal; bail licensees cannot suggest or recommend an attorney. (10 CCR § 2071) On another agency’s website, All Pro Bail Bonds, it claims “if your client is serious enough to hire your firm, then we are willing to pass this savings along in an effort to reduce the overall cost of a sound criminal defense.” This clearly is bending the real motivation behind offering attorney referral discounts. Rather than trying to offset a defendant’s costs, bail agencies want to become better known amongst attorneys. A bail agency can stay competitive by building relationships with attorneys who will refer their clients to the agency.  This is a great way to build a base of future customers. In my interview with one bail agent, he even asked me to consider referring clients to him once I became a lawyer! Attorney referrals are extremely important in the competitive bail industry.

  1. Discounted Rates

Bail agencies also compete through the rates they offer. The normal rate for bail agencies is a 10% premium. Many agents told me that this was the law, but I could not find any law setting the maximum rate at 10%. Since all bail agency rates must be filed through the California Department of Insurance, it would seem that the California Department of Insurance has set 10% as the maximum premium rate, though I also could not find anything about this on their website.

Since all bail agencies operate with premium rates of 10%, they must be competitive Capturethrough their discounts.  Agencies offer many different kinds of discounts for clients: for being a part of qualified unions, the military, AARP, for hiring private defense counsel (attorney referrals, as described above), for being a homeowner and for being a Government Employee. They even have discounts if you are in school, are Native American, on a fixed income or have food stamps. Typically, the discounted rate for these is 8% or even as low as 7%. See a comparison of the discounted rates for two of Santa Clara County’s top agencies in a chart I created, left.

Bail agencies also offer payment plans. Some agencies are not willing to take on certain clients, because of their bad credit, lack of eligible co-signors, or low bail amount. Other agencies are more willing to work with clients to come up with options and payment plans that will work for them.

In conclusion, the bail industry is competitive and has a unique way of competing. If I was starting a bail agency (and I am not), I would definitely have my agency close to the courthouse, with super-flashy advertisements, but balance that with a more professional image, while offering plenty of flexible plans and discounted rates. But more importantly, I would make sure to follow all the laws surrounding bail. Competition is fierce, but a bail agency must not get so caught up in the competition so as to disobey the law. In my next post, I will look at those illegal practices that get bail agents into trouble.