Seems like every few weeks a story comes up about surety fraud in some form or another. From crooked agents issuing bonds that were not approved, to contractors forging signatures and issuing bogus bonds, to individual surety companies collected huge premiums on bonds worth nothing, these can all largely be avoided by some key steps by contracting officers, purchasing and procurement officials, general contractors, and any other entity that is the beneficiary of performance and payment bonds. Here are 5 steps to take to greatly reduce the chance of receiving a fraudulent bond:
Performance and payment bonds are required under federal law to ensure that public projects are completed and all 1st and 2nd tier subcontractors and suppliers are paid what they are owed. As the obligee (beneficiary) of the bond, you are paying for this protection. Do yourself a favor and take these steps to prevent fraudulent bonds to protect your interests; and from littering our industry.