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What is the purpose of having a Collection Agency Bond?

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Oct 30, 2019 11:33 am

What is the purpose of having a Collection Agency Bond?
Oct 30, 2019 11:43 am

Collection Agency Bond is there to enhance the trustworthiness and reliability of the agency being hired to manage a customer’s debt.

In the U.S., most states require collection agencies to have a collection agency bond before they are issued a license to operate in that state. The primary role of these collection agencies is to collect outstanding debts and forward the amount to the company that hired them.

A collection agency bond covers 3 parties including the principal, which is the collection agent or agency that purchases the bond; the Obligee, which is the government agency that requires the bond to be filled; and the surety, which is the insurance company that issues the bond to the principal or the collection agency.