Delivers on Governor's Promise to Provide Coordinated Response to Unscrupulous Activity in the Bail Bond Industry Within 60 Days
New Department of Financial Services Regulation, Which Follows Statewide Listening Tour with Department of State, Eliminates Illegal Fees, Requires Approval of Bail Contracts, Enforces the Timely Return of Collateral and Premiums, and Increases Reporting
DFS and DOS to Launch Bail Bond Consumer "Bill of Rights" Following Adoption of Final Regulation
Governor Andrew M. Cuomo today announced a new proposed Department of Financial Services regulation to raise the standards of integrity in the bail business, protect vulnerable New Yorkers from abuses in the industry, and increase transparency and understanding of bail bonds. The new proposed regulation follows DFS's continuing investigation of the bail bond industry as well as a series of state-wide public listening sessions held jointly in June with the New York Department of State.
The investigation and sessions revealed an industry riddled with harmful practices and abuses of vulnerable New Yorkers, frequently those from marginalized groups. The proposed regulation outlaws these practices to the extent of the state's current statutory authority. The Governor also announced that DFS and DOS will provide and educate consumers on a new bail bond "bill of rights" to help New Yorkers better understand the bail bond system and their rights under that system.
"These reforms are critical in our efforts to crack down on predatory practices in the bail bond industry and protect New Yorkers from unscrupulous activity and ensure that everyone, regardless of economic status, is provided fair and equal treatment under the law," Governor Cuomo said. "We are actively working to reform our antiquated bail system to ensure New York remains a beacon of equality and justice for the nation."
The new DFS regulation announced today:
- Clarifies that bail agents may not charge fees other than the premiums set by statute, and costs of special bail conditions imposed by a court;
- Requires the superintendent's prior approval of all bail bond contracts and forms, and prohibits the use of unapproved forms;
- Mandates the timely return of collateral and premium where appropriate;
- Requires that bail agents provide consumers with receipts and copies of all contracts and documents involved in the bail transaction;
- Instructs that if bail agents surrender a defendant to the court and seek to cancel a bond, then they must explain, in writing, their reasons to the court and to the purchaser of the bond;
- Orders closer supervision of bail agents by surety companies;
- Requires that bail agents post their licenses and display "how to make a complaint" signs;
- Mandates that bail agents provide consumers with a disclosure that outlines consumer rights and bail agent responsibilities;
- Requires increased and improved record keeping and reporting.
Reforming New York's outdated bail system is a critical component of the Governor's comprehensive criminal justice agenda and New York's commitment to legislative bail system reform, including eliminating monetary bail for misdemeanors and nonviolent felonies. After an announcement by the Governor in May, DFS, which has licensing, supervisory and enforcement authority over bail sureties and agents, and the Department of State's Division of Consumer Protection, which deals with consumer education, held a series of listening sessions in New York City, Western New York and Central New York. DFS also commenced an investigation of the industry, demanding information and documents from all licensed surety companies and bail agents in New York. This investigation remains ongoing and DFS encourages any affected party to contact them toll-free at (800) 342-3736 or at [email protected]. Bail agents who are found to have violated the law are subject to license revocation, as well as financial penalties.
DFS's investigation and the joint listening tour found many hard-working agents doing their best to help New Yorkers secure release of their loved ones, but found abuse through the system as well. The listening sessions heard consumer complaints about the fees and costs that bail agents charge, the return of collateral, as well as issues of transparency, the rights of consumers and the responsibilities of bail agents.
The new proposed regulation follows guidance DFS issued last year regarding the unanimous 2017 decision by the New York Court of Appeals in Gevorkyan v. Judelson that confirmed the Department's position that under New York Insurance Law, the premium follows the risk. When a defendant is not released from custody there is no risk to the bail surety company or the bail agent so they must return the premium.
In addition to the proposed regulation, DFS and DCP will create co-branded consumer education materials including a consumer "bill of rights" to provide consumers tangible advice and guidance when engaging a bail agent. The materials will be available both agency's websites. DCP will highlight concerns with the bail industry in public presentations.
"We are working to protect New Yorkers' rights, combat abuse, and help individuals better understand the bail bond system," said Lieutenant Governor Kathy Hochul. "These improvements to the bail bond industry will ensure consumer protections and increase transparency in the industry. The Governor and I are committed to ensuring fairness and justice for all New Yorkers."
Financial Services Superintendent Maria T. Vullo said, "DFS is proud to support the Governor's initiatives to protect New Yorkers from abuses in the bail industry by promulgating this new proposed regulation. We will not allow bail agents to take advantage of New Yorkers who are often at their most vulnerable. The Department will continue to support the State's response through additional regulatory reforms, appropriate enforcement actions and other targeted measures to ensure fair and just treatment for all New Yorkers."
New York Secretary of State Rossana Rosado said, "When a New Yorker needs to engage the services of a bail bond agent, it is rarely a planned activity. The consumer engaging the service is often overwhelmed with the unexpected expense, urgency and potential impact of the underlying criminal charges. Therefore, the Division of Consumer Protection will work to educate New Yorkers about their rights and all available remedies when engaging a bail agent."
The Administration will continue to explore additional legislative and other changes to strengthen New York's authority over bail agents, and promote the use of alternative forms of bail, such as unsecured and partially secured bonds that are issued directly by the court, obviating the need for cash or commercial bail bonds.
The proposed regulation is subject to a 60-day comment period following publication in the State Register. A copy of the regulation can be found here.