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These surety bonds are general for all states.
Learn more about collection agency bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
A collection agency bond (also referred to as a debt collector bond) is a type of license and permit surety bond. More than half of all states require these bonds as part of the process of becoming licensed to do business in the state.
One of the reasons for this requirement is the fact that collection agencies have access to consumers’ sensitive personal and financial information, which must be safeguarded and used only for legitimate business purposes. These bonds serve as a guarantee that the agency will conduct its business in accordance with all relevant rules and regulations, thereby providing protection for the public.
Any collection agency seeking to obtain or renew a license to do business in a state with a bonding requirement must first purchase the requisite collection agency bond. Collection agencies doing business in multiple states may need to purchase a bond in each of those states.
Anyone harmed by the prohibited acts of a collection agency may file a claim against the agency’s surety bond up to the total amount of the bond. For example, a consumer might file a claim on the basis of fraud, theft, deliberate manipulation of fees, and similar acts prohibited by the terms of the bond.
The surety company will investigate each claim to determine whether or not it is valid. If a claim is found to be valid, the surety company will urge the collection agency to pay it. If it doesn’t, the surety company will pay the claim and then pursue the collection agency for reimbursement plus any legal costs incurred.
The total bond amount required varies state-to-state. This can range from as low as $1,500 to as high as $60,000 but more typically falls within the $5,000 to $25,000 range. The premium the collection agency will pay is a percentage of that total bond amount. That percentage is established for each applicant based largely on the personal credit score of the agency’s owner. Applicants with good credit may pay as little as 1% of the total bond amount. Credit-challenged applicants will pay more, possibly as much as 15%.
Use our convenient online system to apply for a collection agency bond today.
