A collection agency bond protects the public against harm resulting from illegal or unethical practices. The bond communicates that your collection agency is under obligation to operate in an ethical and professional manner when collecting a debt from an individual or company. If your business operates in the state of Maryland, you'll know this type of bond as a “collection agency licensee surety bond."
Most states require collection agencies to be properly bonded before they can receive their business license. As a debt collector, you are operating a high-risk business; a surety bond helps you establish credibility and assists in ensuring compliance with industry regulations.
Your debt collector bond also protects consumers by allowing claims against the bond in the event that you are unable to pay a claim directly yourself. The bonding company will seek reimbursement for any claims paid by the bond.
The cost to get a bond for a collection agency varies from state to state and can also vary based on your credit rating. In general, premiums for most states range from $100 to $500, which covers bond amounts ranging from $5,000 to as much as $50,000.
* Cost can vary depending on the bond amount required and your credit rating
In general, collection agency bond requirements are fairly straightforward. If you're in the process of becoming a licensed collection agent and need a surety bond, follow these steps:
Collection agent bonds are available through NNA Surety in the following states: Alaska, Arizona, Colorado, Florida, Indiana, Maryland, Nevada, New Jersey, North Carolina, North Dakota, Oregon, and Tennessee.
Some states handle licensing directly, while others allow you to register via the National Mortgage Licensing System. Regardless of how your state handles debt collector licensing, we encourage you to visit the NMLS site when taking your first steps toward starting a collection agency.