(short)
Turning in bounties by shoving them in cages does not give - reputation.
(long version)
I started a game (with mods, but I don't think any of them are causing this) and it came with or I accidentally hired 2 mercenaries. Anyway, one of them had a 30k bounty for United Cities, so I went and turned him in to the cop and was hit with a -50 faction rep/instant hostility for that group. Being a save scumming wimp when I play, I reloaded and shoved him in a cage instead, and got the reward with no loss of faction reputation.
This leads to massive abuse by hiring mercenaries, taking them to places they are hostile, and letting them rampage small outposts building up massive bounties while you use the distraction to smuggle goods, and or rob the place blind with little fear of repercussions all the while their bounty will be growing. Shortly before the contract ends, pick them up (they won't mind as they are allies) then turn them in for the massive bounties you managed to make them accumulate-just make sure you use the cages so you aren't the bad guy here and can do it again.
[0.99.1] Bounty reputation loss avoidance
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