Customer Success Story: Jet Surety

To help protect consumers, suppliers and subcontractors, many types of small businesses are required to get a surety bond, an agreement that guarantees reimbursement to the business’s clients if work or payment is not completed and protects the general public from unethical actions committed by the business such as fraud or misrepresentation.

Similar to cosigning a loan, a surety company — often a wing of a larger insurance provider — pledges to pay the value of a small business’s debt or unfulfilled obligation should the business fail to hold up its end of a contract or otherwise comply with the bond’s provisions. Many industries require businesses to obtain a bond as a prerequisite to receiving a business license or to begin work on a construction project. Examples include surety bonds for participants in the trucking, construction, automotive and mortgage industries. There are over 10,000 different types of surety bonds, each with its own unique purpose and provisions.

Before signing a bond, the surety company vets the business like a lender would underwrite a mortgage. Most of the time, the primary consideration is the business owner’s personal credit rating. Larger bonds require a more in-depth review — including confirming cash assets — that has traditionally involved a time consuming, back-and-forth process of gathering documents and scrutinizing bank balances. In addition to these inefficiencies, the process often fails to present the full picture of the applicant’s financial health. Accepting outdated documents or focusing on limited criteria can allow risky applicants to be approved.

Insufficient vetting can mislead a surety company into bonding a cash-strapped startup. In extreme cases, it can even mask fraud, a problem currently plaguing the trucking industry.

This mix of fraud and insufficient underwriting practices has caused many bond providers to raise rates on Freight Broker Bonds or, in some cases, exit the market altogether.

Thankfully, with the help of Mastercard Open Banking, Jet has been able to find a better path forward.

With a few clicks on Mastercard’s easy-to-navigate interface, businesses can share information from their bank accounts with Jet, making the application process faster so that Jet can deliver quotes in minutes instead of days. Mastercard’s reputation for trust means customers feel confident that their data will be kept safe, and because Mastercard Open Banking integrates easily into Jet’s decisioning algorithms, qualified businesses receive near-instant quotes.

Jet was founded eight years ago to bring surety bonds directly to the market, bypassing the intermediaries between small business customers and the insurance companies who pay the claims. By cutting out layers of intermediaries, Jet offers lower rates, an easier application process and faster approvals. It now underwrites thousands of types of surety bonds for various industries.

But as the number of fraudulent customers increased, Jet needed a reliable — and fast — method to verify applicants’ assets. Last year, they turned to Mastercard Open Banking’s Verification of Assets (VOA) product, provided by Finicity, a Mastercard company, for help. 

“Shipping prices skyrocketed during COVID. Fraudsters spotted a golden opportunity: To get a surety bond, a fraudster would steal an identity and apply for a bond using the victim’s credit report. Upon securing their bond and license, the fraudster would quickly arrange as many loads as possible and get paid by the shippers but never compensate the truckers, leaving the surety company on the hook for tens of thousands of dollars in claims,” said Dakota Rhea, Head of Jet Surety’s Freight Broker Program.

With a few clicks on Mastercard’s easy-to-navigate interface, businesses can share information from their bank accounts with Jet, making the application process faster so that Jet can deliver quotes in minutes instead of days. Mastercard’s reputation for trust means customers feel confident that their data will be kept safe, and because Mastercard Open Banking integrates easily into Jet’s decisioning algorithms, qualified businesses receive near-instant quotes.

With a growing pool of accessible and reliable open banking data, Jet can analyze its performance among different bond types and continue to hone its underwriting criteria. Jet expects to use those insights to stamp out fraud and make surety bonds even more affordable for legitimate, qualified businesses.