Another US Surrogacy Agency Has Collapsed – Are Your Dreams at Risk?

A recent collapse of a United States surrogacy agency has again exposed a harsh reality for intended parents: the path to building a family through surrogacy is vulnerable to fraud, mismanagement and sudden collapse. Hundreds of people are reported to be affected, with life savings wiped out, records shredded and law enforcement stepping in. This is not an isolated incident. Earlier this year a major escrow provider also failed and millions of dollars were reported missing.

Pattern, not accident

There is a disturbing pattern behind these headlines. Over the last two decades a small but consequential series of failures has left intended parents financially devastated and surrogates and donors exposed to increased risk. Examples include escrow companies that disappear with funds, agency owners who misrepresent their services, and even prominent professionals who abused their position.

“It felt like a case of the magic pudding – something seems too good to be true.”

That observation encapsulates a common red flag. When an offer appears unusually cheap or an agency promises improbable guarantees, the sensible response is heightened scrutiny rather than swift optimism.

Notable failures and what they reveal

Several well publicised cases illustrate different failure mechanisms.

• Escrow collapse – An escrow company tasked with holding intended parents’ funds collapsed earlier in the year, leaving millions unaccounted for and triggering FBI investigation. Escrow is a central financial control in US surrogacy arrangements; when it fails the entire funding structure collapses.
• Agency owner disappearing with funds – There have been multiple instances where agency owners claimed funds were held in escrow when in reality those funds were misappropriated. Intended parents sometimes only learn the truth when a surrogate is already pregnant and payments are due.
• Abuse of position – In one infamous case a high profile attorney presented already pregnant women as available surrogates, effectively engaging in trafficking. That person was prosecuted and imprisoned.
• Fraud by practitioners – Lawyers or agents who claim to operate trust accounts or escrow arrangements but instead use client funds for personal purposes are another recurring theme.

Each example shows a different weakness: insufficient oversight of escrow providers, poor industry regulation, and the ability of a single person to cause serious harm when proper checks are absent.

Who is harmed?

The fallout reaches everyone involved in a surrogacy arrangement.

• Intended parents lose savings and potentially their chance to secure a surrogate at an appropriate time.
• Surrogates can be left unpaid or placed in precarious positions when their contractual payments are interrupted.
• Egg donors may face exploitation if agencies do not maintain clear, ethical practices.

Ethical practitioners predominate across the sector and many are driven by altruism and lived experience. Nevertheless, even a small number of bad actors can have catastrophic effects because of the sums involved and the emotional stakes.

Practical protections for intended parents

There are steps that materially reduce risk. Drawing on long experience supporting cross-border surrogacy journeys, the following precautions are essential.

1. Research the market thoroughly. If an organisation is unknown to experienced surrogacy lawyers, that is a red flag. There are hundreds of agencies in the United States; reputation matters.
2. Verify escrow arrangements. Escrow is how funds are normally held in the United States. Ask for independent confirmation that money is held in a reputable escrow company or a lawyer’s trust account. Where possible, insist on a named and regulated escrow provider.
3. Prefer lawyers with trust accounts. A small number of lawyers hold client funds in trust accounts they control. When those lawyers have an established international practice they can be an added safeguard.
4. Demand transparent contracts and milestone reporting. Contracts should specify payment schedules, conditions for release of funds and recourse if the agency fails. Regular, verifiable reporting of escrow balances gives better visibility.
5. Use experienced legal counsel on both sides of the transaction. Legal advisers who have repeatedly managed international surrogacy cases can spot implausible promises and hidden risks.
6. Watch for classic red flags. Unusually low prices, claims of surrogates already pregnant and pressure to transfer large sums without independent verification are common warning signs.
7. Plan for contingencies. Understand what will happen if an agency collapses mid-process – who will fund the surrogate, where records are kept, and how parentage orders or immigration steps will proceed.

Why regulation matters

The repeated failures demonstrate that voluntary good practice alone cannot eliminate risk. Regulation does not need to be ideological or rushed. It needs to be pragmatic, carefully designed and consistently enforced so that escrow providers, agencies and practitioners are subject to minimum standards of conduct and financial oversight.

Key regulatory objectives should include:

• Standards for escrow and trust accounts including audit and reporting requirements.
• Licensing or accreditation for agencies and service providers dealing with third party funds.
• Clear consumer protections and dispute resolution pathways for intended parents and surrogates.
• Criminal and civil penalties targeted at financial misconduct and human trafficking.

Industry bodies play an important role promoting ethical practice, but the state has unique tools to prevent large scale financial loss and to prosecute criminal conduct. Without those tools, another collapse is almost inevitable.

Where to start if you are considering surrogacy in the United States

Begin with reputable advice. Engage a lawyer who has managed international surrogacy journeys and can advise on which agencies and escrow companies have reliable track records. Demand transparency at every step and make sure any contract explicitly addresses how funds are held and released.

It is also wise to understand the legal and immigration implications for the child and parents. Those matters are often time critical and intertwined with financial arrangements.

Final note

The surrogacy field is populated by many compassionate, ethical professionals who help families safely build their futures. However, repeated financial collapses demonstrate that the system remains exposed. Practical precautions and effective regulation together provide the best defence against the next scandal. Intended parents should act with care, insist on accountability and seek advisers with deep experience in cross-border surrogacy law.

About Stephen Page

Stephen Page is recognised as Australia’s leading surrogacy lawyer with extensive experience supporting Australian intended parents in United States arrangements since 2008. He specialises in family and fertility law, provides practical legal strategies for international surrogacy, and is known for guiding clients through complex escrow, contract and parental order processes while advocating for stronger protections across the industry.