North Carolina Blocks Bail Bondsman Training Monopoly

By Matthew Leach, King Law Offices

In a criminal court proceeding, the State of North Carolina typically sets a bail amount for the criminal defendant.  If the defendant wishes to leave state custody, the bail amount must be pledged to the courts.  The bail amount is intended to guarantee the defendant’s presence at the criminal trial.

However, the bail amount is typically higher than a defendant can afford to pay.  Enter the bail bondsmen.  A bail bondsman is an individual who will put up the financial security on your behalf to the court in exchange for a much smaller up-front payment from you, coupled with an interest rate.  If the defendant fails to show up to court, the bail bondsman loses his/her own security.  If the defendant does show up to court, the bondsman gains the profit from the interest on the defendant’s reduced payment.

The system works because the court still has financial security to improve the likelihood of the defendant appearing in court; the bail bondsman makes money off the interest from the reduced rate and works toward making sure the defendant appears in court; and the defendant benefits because he/she gets to leave state custody at a much lower rate than the court-set bail amount.

Although this may come as a surprise, it is the North Carolina Department of Insurance that has control over the bail bondsmen in the state.1  The Department of Insurance has a number of rules and policies regarding bond procedures, forfeitures, and so forth.2  One of the requirements the Department of Insurance has is that bail bondsmen be licensed.3  The prospective bondsmen must make an application to the Department of Insurance and complete, among other requirements, a twelve-hour pre-licensing class.4  Furthermore, once licensed, each bail bondsman must complete a three-hour continuing education class every year.5  It is these training classes that have been the subject of a recent North Carolina dispute.

Until recently, the only way for prospective and active bail agents to receive the necessary education and training credits was to attend North Carolina Bail Agents Association classes.6  Starting in January 2011, a competitor entered the marketplace an as alternative for the necessary education credits: N.C. Bail Academy.7  Both groups were supplying the same product for the same purpose – education classes for the education requirements of being a bail bondsman.8

However, July 12, 2012, Governor Purdue signed Senate Bill 738 into law that would make the North Carolina Bail Agents Association the only group permitted to supply the education credits for bail bondsman.9  The Department of Insurance supported the move because the increased number of classes was stretching department personnel – who monitor the classes – too thin.10  Mark Black, an attorney with the Association, said that having an additional operation risked diluting the training or spreading Department of Insurance oversight too thin.

Tim Mathis, an instructor with Bail Academy, said that the Association had been raising its fees for classes, but that shortly after the Bail Academy entered the market, the fees were lowered.11  Mathis adds that Association was losing money, so “this [law] is how they responded.”12  Lynette Thompson of Rockford-Cohen Group, the founder of Bail Academy, sued to prevent the law from being enforced because the Association and lawmakers were working together to prevent them from being able to function as a competitor and that the new law would establish an unconstitutional monopoly on bail bondsmen training.13  Evidently, a North Carolina Superior Court Judge agreed.

Superior Court Judge Donald Stephens of Wake County “ruled in favor of the parent company of the North Carolina Bail Academy…and issued a preliminary injunction that prevents the law from being carried out. “14 

Stephens wrote in his order the state constitution allows monopolies to be established only for “necessary public services,” but the pre-licensing and continued education for bail bondsmen doesn't fit that definition and is only an education requirement regulated by Goodwin…”This court cannot find any factual, logical or reasonable basis that (the law) serves any other purpose other than to eliminate all current and future competition for the benefit of a private corporation or association in violation of the North Carolina Constitution,” he added.15

If the law was enforced, Bail Academy would have to close.16

This is only a temporary victory for Bail Academy, however, as a preliminary injunction is not a final case disposition.  The lawsuit will continue, so the final word on the subject remains to be heard.