Privatization of Money Bail

In a previous post, I described the basic structure of for profit bail and addressed potential concerns with the privatization of this section of criminal justice. This post will address whether private bail agents save taxpayers’ money, increase efficiency and innovation in pretrial release, allow policymakers to focus on policy instead of procedure, streamline and downsize government, and, for their customers, whether they increase flexibility of service, quality of service, and the appearance rate in court.

The best approach to this analysis is to look at the service needed, the service actually provided, and the comparative costs and benefits of the private system against public systems. (Here’s an alternative analysis concluding that financial remuneration for pretrial detainees is a preferred solution). The service needed is simple. We presume the innocence of criminal defendants and, in order to not deprive them of liberty without any proven reason, we release the defendant pending trial. The public wants assurances that the released defendant will: 1) not endanger public safety during pretrial release and 2) show up to court (or prevent a failure to appear, “FTA”). Money bail only addresses one of those needs – the failure to appear, discussed below. For the sake of argument, and because the bail industry claims to protect public safety, I address public safety first.

Consider the perspective of a bail agent. A bail agent is a business person whose profit comes from immediate payment by a defendant. The agent risks loss only if that defendant fails to appear. Note that if a defendant commits a crime while out on bail, the bail agent is still paid. In fact, the bail agent is not only paid but now the defendant is incarcerated so their appearance at trial is guaranteed. This is an ideal business outcome; there is no risk and the agent has already been paid. Still better, this is an established customer who is up for money bail again, which amounts to an opportunity for a repeat customer. Bail agents have every motive to select defendants that are likely to commit crimes on release and absolutely no motive to prevent their customers from committing crimes. Given that, it is unsurprising that a Pretrial Justice Institute study comissioned by Santa Clara County found that 29.4% of defendants released on commercial surety bail (CSB) in that county were rearrested while out on bail. A private industry of bail agents, it seems, is motivated to act in a way that harms public safety. Worse, it actually acts on that motive.

The second need, guaranteeing appearance at trial, is complicated to assess. For example, the same report referenced above indicates 13.8% of defendants FTA when released on CSB. Compare this rate to the study’s finding of 9.4% of defendants FTA when released on their own recognizance (OR), or the 15.2% of defendants released on supervised release (SOR), and it appears the industry holds up well. This appearance is wrong for two reasons.

First, the entire argument in favor of a private industry is that it is supposed to function more efficiently and effectively, not the same. Second, when the numbers are assessed with the entire picture in mind, they are actually quite different. Specifically, that 13.8% of FTA does not take into account that almost 30% of defendants released on CSB are rearrested. Therefore they are guaranteed to appear. A more accurate appraisal of the success of CSB is to look at the FTA of those defendants that are actually free for the duration of pretrial. Of those defendants who are not rearrested, the FTA rates are: commercial surety bail at 19.5%; OR at 9.5%; and SOR at 15.8%. The deviation in these numbers is dramatic because the rearrest rate for CSB defendants is dramatically higher than for defendants released on OR (1.7% rearrest) or SOR (3.6% rearrest).

One explanation for the high rate of FTA for CSB is that the public safety anlysis above, suggesting a financial motive for private industry to prefer defendants who will be rearrested, is correct. To clarify, if the bail industry prefers individuals who do not comply with the law then it follows that they might FTA with more regularity. Another explanation is that defendants released on bail bonds have no skin in the game. The money paid to the bail agent is nonrefundable, and as a “sunk cost” it does little to encourage a defendant to show up to court compared to money bail that is held at the court and repaid to the defendant when they appear for all court appointments. (PDF page 4). Admittedly, the defendant is still on the hook for the bail amount to the bail agent, but in reality it is often a cosigner who shoulders that burden. Finally, it is important to note that while a defendant with a high risk of rearrest would be an ideal customer, a defendant who is low risk to FTA is also ideal. For example, bailing out people who would be likely to be released on OR before those defendants know about OR would be highly profitable.

While it seems that privatization of money bail contravenes public safety and has a higher rate of FTA than other forms of release, there are other reasons to privatize an industry. Specifically, does the privatization of money bail save the taxpayers’ money? It cost taxpayers an average of $31,286 per year across the US to house an inmate in prison in 2012. However, defendants that are detained pretrial are usually unsentenced and almost always held locally in jails, not in prisons. A Vera Institute study of 35 counties across the USA found the average cost per day of housing inmates was $128.92. In Santa Clara, pretrial detention costs $204 per day per defendant at the Main Jail. The same report found that over 90% of pretrial detainees were held due to an inability to make money bail. This is not to say that 90% of all pretrial detainees cannot afford bail, but rather that those who have a bail set and remain detained do so because almost always they simply cannot afford it.

Where is the bail agent in these cases? From my own experience watching bail setting, it seems that sometimes money bail is set intentionally high (presumably for public safety) so that the defendant cannot afford even the 10% fee of a bail agent. While that raises a constitutional concern about excessive bail, the bail amount set is not the fault of privatizing money bail. Even though in California, for example, public safety must be addressed when a judge sets a bail amount, many people think that defendants paying a higher dollar amount does not and perhaps cannot correlate to increasing public safety. There is also another potential group of people who cannot afford bail and remain detained pretrial. The privatization of money bail can result in underserving low risk defendant populations who are simply too poor to post bail because their low bail means they are not profitable enough for bail agents to take them on as customers.

In sum, both the logical economic incentives and the research indicate that privatized money bail passes the high cost of detention to the taxpayers, both by incentivizing bail agents to post bail for defendants who are likely to be rearrested, and by failing to incentivize the posting of bail for low risk defendants whose bail is set “too low.” Further, privatizing money bail results in the release of higher-risk defendants without supervision by pretrial services, which harms public safety. Finally, privatized money bail also results in a higher failure to appear rate, once these rates are adjusted for the rearrested population.

There are arguments in favor of privatization, but they also generally conclude that “[r]equiring defendants to pay their bonds in cash can reduce the FTA rate similar to that for those released on surety bond,” which again emphasizes the point that commercial surety bail appears to serve no purpose.

As a final note, my research has identified that bail privatization serves one aspect of pretrial release effectively. In the event of an FTA, the bail agent has a window of time (180 days under CA law) to find the defendant and take them into custody. Many bail agents facing this scenario employ a fugitive recovery agent, perhaps better known as a bounty hunter. A bail agent will often pay the bounty hunter a percentage of the bail amount, sometimes as low as 10% – which, since the agent has been paid that already, would result in no direct financial loss (discounting time spent and other overhead). This also raises another doubt as to the motivation of bail agents to ensure against FTA.

Bounty hunters succeed at recapturing refugees as often as 97% of the time. This is probably due to two things. First, bounty hunters have one job, whereas police cannot focus purely on capturing fugitives. Second, bounty hunters are private actors that benefit from not being restricted by the constitution. Specifically, all of those difficult hurdles for police, such as not being able to detain without a warrant, or not being able to break into private residences or cross jurisdictional lines, are not problems for bounty hunters. At the least, bounty hunters are effective and cost the taxpayer virtually nothing; merely the pittance of throwing out constitutional limitations on the enforcement of law.