Surrogacy is, in most cases, a safe and well-established path to building a family. Over the past year, however, a few high-profile cases have received significant attention and raised questions.
These are topics that now come up more often in early conversations with intended parents and women considering the journey. You want to understand what happened, whether it’s something to be concerned about, and what to look out for.
The cases that made the headlines are real, but they remain isolated and not representative of how surrogacy is typically practiced. Still, they highlight areas where clarity and safeguards matter.
This article provides an updated look at those cases, building on what we previously shared, so you can form your own view based on the latest information. It also outlines what is being done across the industry to strengthen protections and keep the process safe for all.
1. SEAM Escrow fraud case: A Non-Licensed Escrow Company
Escrow Fraud Cases Putting Surrogacy Journeys In Jeopardy
One of the most widely reported surrogacy scandals in the past year involved a Houston-based company called SEAM, which presented itself as a surrogacy escrow provider.
What is escrow in the first place?
Definition: Escrow is a safe way to hold money during an agreement between two parties.
Instead of paying someone directly, the money is placed with a neutral third party (called an escrow service). The funds are only released when agreed conditions are met—for example, when a step in the process is completed.
In simple terms, and for surrogacy specifically, escrow protects the funds intended parents set aside for the journey by holding them with a neutral third party. Payments are then reviewed and released step by step, ensuring everything is handled securely and as agreed.
As a surrogacy escrow account management company, SEAM had an obligation to the intended parents’ escrow agent to hold escrow funds, review the expenses incurred by their surrogates and distribute payments to the surrogate.
Escrow fraud and misappropriation of funds
Investigations later revealed that SEAM (Surrogacy Escrow Account Management) is a company that is not licensed to conduct escrow or holds any credentials to operate an escrow company. According to the reports and court filings, approximately $16 million worth of funds meant to fund surrogacy journeys including paying surrogates that were pregnant, was misappropriated.
The consequences were devastating. Intended parents lost their savings that they have set aside for their dream family, and many surrogates, who were already pregnant, were left without expected compensation.
Did the surrogates - who did not get paid - keep the baby?
No, surrogates did not keep the babies and definitely did not abort. Most surrogates who are on their journey and are already pregnant when the unfortunate event happened come to some sort of settlement with their Intended Parents.
In one reported case from People.com, an intended parent shared how her immediate concern was not the financial loss, but the well-being of her surrogate. After learning that the escrow company had collapsed early in the pregnancy, she focused on staying in communication and finding a way forward together. Through a series of conversations, they agreed to revise their agreement so payments could continue in installments through a new escrow account, allowing the journey to continue despite the incident.
Other families described similar experiences, where financial setbacks due to the incident did not stop them from continuing the journey. Another story from the same news article talks about a couple who were navigating a previous loss and share how support from their own parents helped them recover and continue on. They expressed both the emotional weight of the situation and their determination to keep moving forward, fueled by the hope that they will be able to finally welcome their child.
In another case, a couple explained the significant sacrifices they made after losing funds, including selling personal assets, taking out loans and using their savings to continue supporting their surrogate.Despite the financial strain, they remained committed to the journey and even created a fundraiser, not only to support their own situation but also to help other families as well.
Where are they now?
Case outcome: lawsuit & FBI investigation
Having created such financial and emotional distress, with some other journeys placed at risk due to sudden loss of funds, the case led to lawsuits and federal investigation. Authorities have determined that escrow funds were diverted for personal use unrelated to surrogacy services.
A Harris County judge later ordered the company’s owner to repay more than $1 million in restitution to several intended parents who joined the lawsuit. This decision recognized that the funds placed in escrow for their surrogacy journeys had been wrongfully taken by SEAM. For many families, those funds represented years of savings set aside specifically to family building. Individual losses were recorded to be tens of thousands of dollars per family.
For a more detailed breakdown of the court’s ruling and case timeline, you can read the full report of Fox 26 Houston: Judge orders over $1 million restitution in Houston surrogacy scam case.
Why check the legitimacy & credentials of Escrow Provider beforehand
In the light of recent cases involving financial mismanagement, such as the SEAM incident, it is understandable that many families have questions about the safety of surrogacy. These situations have brought greater attention to how surrogacy funds are managed and what safeguards should be in place to protect all parties.
In response to these concerns, SurrogateFirst CEO, Jeff Hu was invited by a number of media outlets to share his expert opinion and perspective on financial protection in surrogacy:
"Safety of our clients’ investments is paramount, and families should never have to harbor concerns about the security of their funds.”
This principle highlights what responsible practices should look like. Funds should be managed through independent, properly structured escrow systems that have clear processes at every stage of the journey.
As shared in a feature on WVIR, SurrogateFirst CEO Jeff Hu emphasized that financial safeguards are NOT OPTIONAL. They are built into the process to help ensure that every journey is handled with care, clarity and accountability. From structured financial management to ethical practices, every step is designed to support a secure and transparent experience for both intended parents and surrogates.
For a deeper look at Jeff Hu’s perspective on financial protection in surrogacy and how agencies can safeguard families, you can read his full statements here.
2. SurroConnections Case: When a Surrogacy Agency Suddenly Closed
At first, there was no clear explanation. Communication stopped, and the agency’s owner became unreachable, leaving intended parents and surrogates confused and alarmed.
One intended parent, Mariana Klaveno, shared that she had transferred more than $66,000 to the agency’s in-house escrow in preparation for an upcoming embryo transfer. Shortly after, her surrogate reached out with growing concern.
“Other surrogates aren’t getting paid. Everyone’s freaking out. Everyone says to get a lawyer,” Klaveno recalled her saying. “And then come to find out that no one can get a hold of the owner … and none of the intended parents can access the supposed escrow account that we were assured was safe.”
As more families tried to reach the agency, the situation became increasingly unclear. Then, two days later, an official email was sent that Surro Connections was “ceasing all operations” due to financial and operational difficulties.
For many families and surrogates, what began as a hopeful journey turned into uncertainty almost overnight.
This section is based on reporting by NBC News.
In-House Escrow: When Client Funds Are Not Protected by A Third Party
This incident further highlights the danger of in-house escrow arrangements. When a surrogacy manages its own escrow funds, the same organization overseeing the journey also controls the money. If that agency experiences financial problems, mismanagement, or sudden closure, client funds may be directly affected which is why this set up is not normally in place
One of the most difficult lessons from the SurroConnections case involved in-house escrow. In this model, the agency holds and manages the funds for surrogate compensation and expenses instead of using an independent provider. When the agency suddenly closed, many intended parents lost access to funds they believed were secure. Some, with ongoing pregnancies, had to quickly find additional money to continue supporting their surrogate—creating significant financial strain during an already emotional time.
The risk with in-house escrow is the lack of separation, which is against the SEEDS Ethical guidelines (to be noted that SurroConnection wasn’t a part of SEEDS). When the same agency manages both the journey and the funds, there is no independent protection if something goes wrong. Third-party escrow providers, on the other hand, are independent, regulated custodians. They hold funds separately and release payments according to agreed terms, adding a critical layer of security and accountability.
For more details on how families were impacted, read the full report by OPB.
Relying on community help
Agencies stepped in to provide pro bono support
How to make sure Surrogacy Agencies Protect your Funds
Cases like these have also led to greater awareness around how surrogacy funds should be managed. For families entering the journey, it can be difficult to know which agencies and service providers are trustworthy. Surrogacy involves multiple moving parts and many intended parents are navigating through the process for the first time.
- Agencies Use a Neutral Third Party Escrow Provider: Instead of the agency holding the funds directly, an independent escrow company manages the financial account for the journey. These providers are responsible for safeguarding the money and distributing the payments according to the surrogacy agreement between the intended parent and the surrogate. It is also important to make sure that the escrow provider is licensed and regulated.
- Funds Protection/Agency Insurance for payments going through agency: Reputable agencies maintain financial safeguards such as professional liability coverage or other protections designed to protect client funds. These measures provide an additional layer of security and accountability in the event that unexpected financial issues arise.
- Transparency: Intended Parents should have a clear documentation outlining where the funds are held, how payments will be made, and how expenses are reviewed. Regular reports on financial disbursements and use along with open communication help ensure that everyone involved in the journey understands how funds are managed.
How it look like when everything goes well
A step towards unified regulations: Seeds Ethics for Escrow Providers
In response to situations like those described above, professional organizations within the assisted reproduction industry have worked to strengthen ethical standards for financial management.
One key effort comes from the Society for Ethics in Egg Donation and Surrogacy (SEEDS), which brings together agencies, legal professionals, escrow providers, and other service partners. SEEDS introduced the Standards of Ethical Conduct for Member Escrow Providers to improve how funds are managed, ensuring greater transparency, accountability, and protection of client funds. These standards help define best practices for escrow management and contribute to a more secure and trustworthy process for intended parents, surrogates, and donors.
The standards emphasize several core principles designed to protect client funds:
- Independent, bonded escrow
Escrow providers should operate independently and maintain appropriate bonding or financial safeguards to protect client funds. - No co-mingling of funds
Client escrow accounts must remain separate and should never be mixed with an agency’s operational funds or the escrow provider’s business accounts. - Clear approval workflows
Payments and reimbursements should follow structured approval processes to ensure expenses are reviewed and authorized before funds are distributed. - Transparent accounting
All parties should have access to clear financial records and statements that show how funds are being managed and distributed. - Systems built for safety
Escrow providers should maintain structured financial systems designed specifically to safeguard funds used in assisted reproduction journeys.
Best practices to avoid most common surrogacy scams
In the previous sections of this article, we discussed several cases that have occurred within the surrogacy industry in recent years. While each situation was different, most cases share a similar motivation: financial gain.
Here are the most common type of surrogacy fraud cases and a reminder of what’s most important to check to avoid them:
- Unsecured advance payments: remember to look for a structured process for large payments and a legal agreement that supports it.
- Fake agencies: remember to verify the legitimacy of the Surrogacy Agency (though online reviews, testimonials, proven track record)
- Agency-managed escrow: always use independent Third Party Escrow
- Missing legal contracts: ensure Legal Contracts are completed before the journey begins
Green Flags In Surrogacy Agencies
- A Clearly Outlined Process
Great agencies take the time to explain every step of the journey, from screening to postpartum recovery. - Dedicated Support For Both Parties
Agencies should provide separate coordinators or case managers for surrogates and intended parents, making sure everyone has advocacy. - Access To Comprehensive Services
These include legal, psychological, medical, and financial support, all with professionals who specialize in surrogacy. - Positive Testimonials From Real People
Look for stories from former surrogates or families that show how the agency handled both challenges and celebrations. - Affiliations With Ethical Organizations
Agencies that are members of Society for Ethics in EggDonation and Surrogacy (SEEDS), American Society for Reproductive Medicine (ASRM), or partner with well-known clinics show a commitment to best practices. - Consistent, Respectful Communication
You should feel heard and supported, not ghosted or pressured. If you feel that you are being left in the dark because of unclear answers and delayed responses, take that as a sign to pause and ask for adjustments. A reputable agency communicates openly, keeps you updated and makes sure you understand every step of the process. - Personalized Matching Approach
Matching should be based on values, communication style, and shared expectations, not just availability/compensation.
Towards better surrogacy regulation: ethical surrogacy agencies
"In all of those cases, one consistent thing emerged: when challenges arise, ethical agencies and responsible professionals step forward to help ensure that families and surrogates are not left alone in their journeys.”
The cases mentioned above have also accelerated important conversations across the industry about stronger regulation and clearer professional standards. As surrogacy becomes more widely used as a path to family building, there is increasing recognition that stronger oversight can help protect intended parents, surrogates and donors.
One of the main questions opened is the possibility to develop licensing mechanisms for surrogacy agencies and service providers. The state of New York already works in that way. Such licensing would help ensure that agencies meet minimum operational standards, follow financial safeguards and work with qualified professionals across all the journeys they handle. We will keep our reader informed of further developments in the months to come.
Surrogacy Cases FAQs
How can I identify common surrogacy scams in the US?
Watch out for vague timelines, costs that are unclear or processes that are not fully explained. If an agency or a service provider is rushing you to commit and avoids detailed contracts, then consider that a red flag. Take the time to research and check on the agency’s partnerships, credentials and professional affiliations. A legitimate agency will explain the process clearly and will not hide potential risks. It is always best to request for references and speak to families from their past cases if possible.
What are the best services to verify legitimate surrogacy agencies?
There isn’t one platform that verifies everything, so it is important to cross-check and go through multiple sources. Look at professional affiliations (such as SEEDS), clinic partnerships, and the qualifications of legal and medical partners. Legitimate surrogacy agencies have clearer processes, detailed legal agreements and consistent communication. Seeking independent legal advice is best before moving forward.
Which platforms offer reviews of surrogacy companies to avoid scams?
You can start with Google Reviews, SurrogacyNetwork.org Reviews and other discussions and forums on fertility. If you are looking into reviews from personal experiences, some share through social media platforms, particularly onFacebook Groups or Tiktok Short Form Videos. But remember to take all those with a grain of salt and instead focus on consistent feedback patterns. Balancing reviews with direct research and professional verification is important because while reviews are helpful, they should not be your only source of information.
What are the warning signs of surrogacy scams to watch for?
If contracts are missing or unclear, unrealistic promises are being made and if costs are not explained properly, these may be warning signs. A good and legitimate agency should be able to explain everything clearly and are guided by standards and legal safeguards to the journey. If you are unsure of what a safe and trustworthy agency should look like, you can read through an article we made on surrogacy agency red flags and green flags.
What are the most well-known surrogacy scandals involving fertility agencies?
While surrogacy is generally a safe and well-regulated process, a small number of cases have received media attention due to ethical breaches or medical errors. In rare instances, embryo mix-ups have led to women carrying and giving birth to a child not genetically related to them, with some later transferring custody to the biological parents. For example, an IVF mix-up reported by ABC News highlights how such situations can occur despite strict protocols. Although these cases can be shocking, they are extremely uncommon and not representative of the industry. They do, however, reinforce the importance of choosing experienced, transparent professionals and clinics with strong safeguard.
How can I research a surrogacy agency's past legal issues?
Search the agency name alongside terms like “lawsuit,” “complaint,” or “fraud.” Check public court records, news articles, and state business filings, and look for patterns rather than isolated cases. You can also ask the agency directly about past issues and how they were resolved. It’s also recommended to discuss your findings with your legal representation. Transparency in answering these questions is a positive sign.
What legal protections are available for intended parents in surrogacy arrangements?
Intended parents are protected through legally binding contracts that outline compensation, responsibilities, and contingencies. Independent legal representation for all parties is standard. Many states also allow pre-birth or post-birth orders to establish parental rights. Working with experienced professionals helps ensure the process is secure and compliant throughout the journey. To learn more, you may explore what surrogacy contract covers and why it matters.
