Ethical Standards, Unfair Trade Practices, and Prohibited Conduct
This domain tests conduct: the practices that are barred outright, the conflicts that must be avoided, and why violations carry licensing, civil, and sometimes criminal consequences.
Prohibited conduct
- Rebating or splitting premium with any unlicensed person - including attorneys, court or jail employees, and referral networks.
- Soliciting business inside a jail, courthouse, or detention facility, or using arrest records obtained improperly.
- Misrepresenting terms, the agent's authority, or any connection to the court or prosecutor.
- Giving legal advice or selecting an attorney for the client; promising a particular outcome.
- Coercion to collect: threats of arrest, immigration reports, or disclosure to employers.
- Discrimination, harassment, and sexual contact with clients.
- Commingling collateral or premium with operating funds, or using client collateral.
- Undisclosed conflicts: bonding a family member, employee, or any matter in which the agent holds a financial interest.
Why it matters
These acts are unfair trade practices exposing the agent to the Consumer Fraud Act and the insurance trade practices statute, to license suspension or revocation, to restitution orders, and to criminal referral.
Worked example
An agent pays a court clerk $500 for each referral and calls it a "courtesy." Reasoning: payment for referrals to an unlicensed person is illegal remuneration. Both parties face discipline, the agent faces revocation and restitution, and the payment may be a crime.
Traps that cost marks
- Assuming referral fees to licensed attorneys are permissible - they are not.
- Assuming an apology or refund erases a solicitation violation.
- Overlooking that a single act of coercion, not a pattern, is enough for discipline.