Collection Agency Bonds

Also known as a debt collector bond, a collection agency bond is a type of surety bond required from collection agencies. The bond is a promise that the agency will follow the rules and regulations of the industry. If the agency defaults on these rules, a claim can be made against the bond. This bond assures that the agency has the state’s approval for ethical and professional practices.

Why is a collection agency bond required?

The bond protects against the inherent risk in a collection agency’s work. The main purpose of a collection agency is to collect debt from the public, businesses, etc. This line of work can put personal and sensitive information at risk if collection agencies do not use it responsibly, which can lead to malpractices.The bond is the state’s attempt to ensure that fair practices are maintained in the industry.

How much does a collection agency bond cost?

The cost depends on the state. It can vary from $5,000 (Alaska) to $50,000 (Minnesota). The approval for the bond depends on the collection agency’s credit history. A good credit history means quicker bond approval. Agencies with bad credit history may also be approved if the surety company feels that the agency is worth the risk.