Court of Appeal Says Surety Companies Must Follow Consumer Protection Laws, Bans Collection of $ 38 Million in Debt – YubaNet
The California Court of Appeals yesterday upheld the decision to halt Bad Boys Bail Bonds’ debt collection efforts on $ 38 million in contracts, saying the surety industry must adhere to debt protection laws. consumers. This landmark class action lawsuit on behalf of the co-signers of surety contracts is one of the first to challenge a commercial surety company for violating consumer protection laws. Today’s decision sets a precedent for the enforcement of such laws in the surety industry nationwide.
âToday’s decision is a devastating blow to the surety industry. The court confirmed that it is absolutely illegal for surety companies to violate consumer protection laws. This case is proof that the surety industry is abusing and exploiting vulnerable California families, âsaid Elisa Della-Piana, Legal Director of the San Francisco Bay Area Civil Rights Lawyers Committee. “We anticipate that the impact of this ruling will ripple throughout California – any surety firm violating consumer laws should be prepared to take legal action.”
The court ruled that Bad Boys could not “deprive … the co-signers … of the protections that consumer credit laws were designed to protect.” In addition, the court declared Bad Boys “
‘Any further action that would expose defaulting co-signers to particularly serious forms of irreparable harm – wage garnishments, credit damage, imposition of legal privileges or seizure of securities is prohibited.
âThis decision is a victory for the thousands of Californians lying, deceived and harassed by Bad Boys Bail Bonds. For too long, the commercial surety industry has operated as if it were above the law. Companies like Bad Boys have made millions of people by inducing huge debts to well-meaning people and then using illegal means of fundraising. This ends now, âsaid Niall Mackay Roberts, Partner at Keker, Van Nest & Peters LLP.
The lawsuit was filed by the San Francisco Bay Area Civil Rights Lawyers Committee and Keker, Van Nest and Peters LLP.
Since 2017, Bad Boys has issued more than 18,000 surety contracts, with outstanding debt on these contracts amounting to nearly $ 38 million. The ruling prevents Bad Boys from taking legal action or engaging in other debt collection efforts against people duped into co-signing Bad Boys surety agreements.
Bad Boys used illegal means to extract huge sums of money from low-income families on the false promise of helping their loved ones get out of jail for a small fee. These family members sign credit surety agreements that hold them accountable for the full amount of the bond owed, without the mandatory co-signatory disclosures required by California law. The co-signers then found themselves struggling with thousands of dollars in bail for which Bad Boys had not given them notice.
Plaintiff Kiara Caldwell co-signed what she believed to be a $ 500 bail payment for her friend in a rushed and deceptive 15-minute meeting with the company. Bad Boys then billed her $ 4,500, threatened her job, harassed her family, and sued her. Co-complainant Donzahniya Pitre co-signed and paid $ 600 for bail for her cognitively impaired brother after Bad Boys told her she would not be responsible for subsequent payments. Months later, Bad Boys began harassing her for payment and subjecting her to threatening calls, several times a week.
Bad Boys violated California consumer law by failing to inform Ms. Caldwell, Ms. Pitre and others in their position of the true nature of their contracts, and violated regulations specifically designed to ensure transparency in business transactions bond.
The class action lawsuit demands that Bad Boys rectify its illegal practices, stop violating consumer protection laws and provide full restitution and relief to Ms Caldwell, Ms Pitre and all the other co-signers in California struggling with illegal debt from the company.
The decision of the court of appeal can be viewed here.
The preliminary injunction can be viewed here.
The class action counterclaim can be viewed here.