Surety Bond Weeds Out Shady Auto Dealer

Surety bonds help separate legitimate businesses from disreputable ones. When a company cannot or avoids obtaining bonds needed to run a legal business, it’s usually a bad sign.

In South Attleboro, MA, police and federal agents allege they found a half-million dollars worth of heroin inside of a used car dealer’s place of business during a raid early last year. The auto dealer has disregarded city ordinances in the past and now because of the drug charges, is unable to renew its $25,000 surety bond which they need for their license.

Surety bonds help limit the amount of shady businesses because most of them are not willing to pay the license or bond fee in order to operate legally. In this case, the auto dealer did have a bond in the past, but now the city council is stepping in and won’t let them obtain a license because of the recent charges. The surety bond guarantees that the company with the bond will follow the rules and regulations that are set by the state; if a company does not honor the regulations set by the state and causes damages, a claim will go out on the bond which will be paid by the surety company who issued the bond. The surety company will then go to the individual(s) who obtained the bond for reimbursement.

According to the police, this company was not following state or federal law. The surety bond that the auto dealer had in place guaranteed that they would follow state law. In the state of Massachusetts, an auto dealer needs a surety bond to acquire a legal license, and the individuals here who seem to have a history of now following the rules will have a hard time of doing so.