Bond Fraud: How to Verify Your Agency and Surety

American Surety Bonds Agency, LLC holds an active Georgia agency license (Principal Agency, License #170668), and every one of our individual bond agents is separately licensed as well. We’re glad to lead with that, because it’s exactly the kind of thing you should be able to confirm about any agency before you trust them with your bond, not just take on faith.

Before you apply for a surety bond, it’s worth taking the time to confirm the agency you’re working with is legitimate. Once your bond is issued, it’s just as important to confirm the surety company backing it is legitimate too. Skipping either check can cost you real money, and while it isn’t common, fraudulent bonds and unlicensed agencies do exist.

When bond fraud does happen, it can hurt both the person who buys the bond and the surety company whose name gets used. It can take a few forms. An agency may not be licensed at all. A bond may carry the name of a real surety company that never authorized it, or the name of a surety that sounds legitimate but doesn’t exist. In some cases, a premium is collected for a bond that’s never issued, or the bond itself is forged with copied seals and signatures. In construction, fake bid bonds have also been used to win public contracts.

The consequences reach well past the paperwork. A state licensing agency, a court, or a project owner can reject a bond that isn’t legitimate, which can put your license, your court filing, or your contract at risk. You can also lose the premium you paid and be left with no valid bond behind your obligation. State insurance departments have taken enforcement action against unlicensed companies that sell bonds without authorization.

None of this means most bond transactions are unsafe. It means that taking the time to verify who you’re working with is real protection, not just paperwork.

There are two things to check.

First, the agent who signs your bond needs an active producer license in their home state and in the obligee’s state, the state of the entity requiring your bond. An agent can’t sign a bond for an obligee in a state where they aren’t licensed, which is why our agents are licensed in all 50 states. Each state’s Department of Insurance issues and tracks these licenses, not the surety company backing the bond.

Second, the surety company backing your bond needs to be a real, authorized surety, not just a name printed on a document. A licensed agency can still hand you a bond from a company that isn’t legitimate, and a fraudulent agency can invent a surety name that sounds real but doesn’t exist at all. We don’t work that way. We only place bonds with credited, rated surety carriers, and you’ll always know which one is backing your bond.

Here are a few simple ways to confirm an agency is the real thing before you apply:

• Start by asking the agency for its legal name, its license number, and the state that licenses it. A legitimate agency will be glad to share them.
• Then look the agency up with the NAIC’s license lookup. Choose the state that licenses the agency, choose Company under Search Type, and search with the agency’s name. If that state isn’t listed, the NAIC’s state insurance departments directory will point you to its insurance department. Most states offer a free lookup on their website that shows whether a license is active.
• It also helps to confirm the agency has a real, physical business address, not just a website and a phone number.
• Last, check that the agency name on your invoice, receipt, and emails matches the name that’s actually licensed. A close variation is worth a second look.

Every one of these checks is free, and if an agency is happy to answer these questions, that’s a good sign.

Once your bond is issued, you’ll know which surety company is backing it. These checks can help you confirm that company is legitimate:

• If a federal agency requires your bond, you can look the surety up on the U.S. Treasury’s List of Certified Companies (Circular 570). It’s alphabetical, so you just scroll to the company’s name. A surety that isn’t on the list isn’t approved for federal bonds, which makes it worth asking your agency about.
• The Surety & Fidelity Association of America (SFAA) has a Bond Verification Contact Directory, and you can open it as a PDF from its Additional Resources page. Press Ctrl+F and type in the surety’s name. If it’s listed, it’s a real company, and you’ll see the contact information it uses for bond questions. The directory only includes SFAA member companies, so if you don’t see the surety, the other checks can help.
• AM Best rates the financial strength of surety companies, which shows how well a company can pay a claim. You’ll need a free account to see the rating.

If the surety doesn’t show up where you’d expect, or the details don’t match what your agency told you, it’s fair to ask your agency about it.

If you notice any of these, it’s worth taking a closer look:

• No license shows up under the agency’s name in the license lookup for the state that licenses it.
• The agency can’t or won’t tell you which state’s Department of Insurance licenses it.
• The surety company named on a federally required bond isn’t on Circular 570.
• You’re pressured to pay right away, especially by wire transfer, before you’ve had a chance to verify anything.
• You’re offered a rate that’s noticeably lower than every other rate, with no clear explanation.
• The agency has no verifiable physical address, only a website and a form.

Spotting one of these doesn’t always mean something is wrong, but it’s a good reason to double-check before you move ahead.

If your bond comes from an agency that isn’t properly licensed, or from a surety company that isn’t legitimate, the obligee, the entity that required the bond in the first place, can reject it outright. If you’re facing a licensing deadline or a contract bid, that could delay your license or cost you the bid.

Checking upfront costs far less than finding out your bond doesn’t count, or doesn’t exist at all.

Yes. American Surety Bonds Agency holds an active agency license with the Georgia Office of Commissioner of Insurance and Safety Fire (Principal Agency, License #170668), our agents are licensed in all 50 states, and we place bonds only with legitimate, verifiable surety companies. Every check described above is one you can run on us directly, and we’d rather you check for yourself than take our word for it.

We work with more than 40 credited, rated surety carriers. Once your bond is issued, we’ll tell you exactly which surety stands behind it, so you can run every check on this page against that company.

American Surety Bonds Agency has been helping businesses and individuals meet their surety bond requirements for decades. Whether you’re applying for your first bond or renewing an existing one, our experienced team is here to help make the bonding process simple and efficient.

When you choose American Surety Bonds Agency, you’ll receive:

• Experienced surety bond professionals
• Competitive rates from leading surety companies
• Fast underwriting and responsive customer service
• A secure online application process
• Assistance throughout the bonding process

Above all, our goal is to make the bonding process straightforward, so you can move forward with confidence.

Bond Fraud and Licensing Questions

Verification Questions

Find the bond you need online, or speak with one of our surety specialists today.

American Surety Bonds Agency proudly serves businesses nationwide with fast approvals, competitive rates, and responsive service.

American Surety can also assist you with any of your other bonding needs, as we are licensed in all 50 states. Call us today at (404) 486-2355 or our toll-free number (877) 201-8976 or find us on Facebook, Twitter, or LinkedIn!