Collection Agency Bonds

If you run a collection agency, securing a collection agency bond is a requirement by the government for a collection agency license. Before you get your bond, however, here are some facts that you should know about:

The bond is meant to ensure ethical practices

Collection agencies deal with a lot of sensitive and confidential information, such as individuals’ financial histories. Therefore, it is important to make sure these collection agencies use this information ethically and responsibly. If an agency was found misusing an individual’s information, they can be financially penalized.

Anyone can file a complaint against the bond

If someone of the general public feels that an agency has acted in an unethical manner, he or she can file a complaint, which is usually a claim against the bond. Claims can be made against discrimination, fraud, theft, or overcharging customers.

The surety will charge the collection agency for the claim amount

The collection agency will be expected to take care of any claims that may come. If they do not, the surety will step in. If the complaint is found invalid, no action will be taken. If the complaint is valid, the surety company will pay the amount as determined by the bond and the collection agency will have to pay the surety company back.

You do not have to pay the full bond amount

You are not expected to pay the full amount when buying a bond. The actual price of the bond will depend on your credit score. The price of a collection agency bond is usually 1-15% of the bond amount, depending on the credit score.