Maryland Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain Maryland Collection Agency Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $5,000
- Who Needs it: All collection agencies operating in Maryland
- Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with licensing law
- Who Regulates Collection Agencies in Maryland: The Maryland Commissioner of Financial Regulation
Maryland statute 7-301 requires all collection agencies operating in the state to obtain a license with the Commissioner of Financial Regulation. The Maryland legislature enacted the licensing laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, collection agencies must purchase and maintain a $5,000 surety bond to be eligible for licensure.
What is the Purpose of the Maryland Collection Agency Bond?
Maryland requires collection agencies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the collection agency fails to comply with the licensing regulations set forth in Maryland statute 7-301-311. Specifically, the bond protects the public in the event the collection agency engages in any acts of fraud or utilizes illegal collection practices. In short, the bond is a type of insurance that protects the public if the collection agency breaks licensing laws.
How Can an Insurance Agent Obtain a Maryland Collection Agency Surety Bond?
BondExchange makes obtaining a Maryland Collection Agency Bond easy. Simply login to your account and use our keyword search to find the “collection” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the Maryland Collection Agency Bond?
No, a credit check is not required for the Maryland Collection Agency Bond. Because the bond is considered relatively low risk, the same rate is offered to all collection agencies in Maryland.
How Much Does the Maryland Collection Agency Bond Cost?
The Maryland Collection Agency Bond costs just $100 per year or $10 per month.
How Does Maryland Define “Collection Agency?”
The Maryland Department of Labor defines a collection agency as any business entity that collects, or attempts to collect, a consumer claim that has been defaulted. Collection agencies also sell forms/letters used in the collection of a consumer claim.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Collection Agencies Apply for a License in Maryland?
Collection agencies in Maryland must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Maryland Collection Agency License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Collection agencies must purchase and maintain a $5,000 surety bond
Step 2 – Request a NMLS Account
The Maryland Collection Agency License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 3 – Complete the Application
- Primary company and consumer complaint contact information
- Company business plan containing the following information:
- Marketing strategies
- Target markets
- Fee schedule
- Operating structure the applicant intends to employ
- A general description of the company’s business model.
- A list of services contemplated to be offered to Maryland consumers
- A list of vendor or affiliate relationships, and the activities and/or services that the proposed vendors or affiliates will provide
- Additional information regarding the company’s business activities in Maryland (see application form)
- Certificate of Good Standing
- Company staffing an internal policies
- Sample copies of all representative contracts, consumer agreements and disclosures
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organizational chart detailing the company’s ownership structure
- Memorandum of Tax Certification confirming all Maryland tax obligations have been met
- Resume detailing any relevant experience by company owners
Collection agencies must pay a $350 license fee when submitting their application
How Do Maryland Collection Agencies Renew Their License?
Collection agencies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Maryland Collection Agency License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Maryland Collection Agency License?
The State of Maryland does not require collection agencies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Collection agencies must purchase and maintain a $5,000 surety bond.
How Do Maryland Collection Agencies File Their Bond?
Collection agencies should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the collection agency. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Date the bond goes into effect
- Date the bond is signed
What Can Maryland Collection Agencies Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, collection agencies in Maryland must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not commit any acts of fraud
- Do not engage in any illegal collection practices
What Other Insurance Products Can Agents Offer Collection Agencies in Maryland?
Maryland does not require collection agencies to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Maryland Collection Agency Customers?
The NMLS conveniently provides a public database to search for active collection agencies in Maryland. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.