New Jersey Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain New a Jersey Collection Agency Bond
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $5,000
- Who Needs it: All collection agencies operating in New Jersey
- Purpose: To ensure the public will receive compensation for any damages should the collection agency commit fraud
- Who Regulates Collection Agencies in New Jersey: The New Jersey Office of the Attorney General
Background
New Jersey statute 45-18-1 requires all collection agencies operating in the state to file a $5,000 surety bond with the Office of the Attorney General. The New Jersey legislature enacted the bonding requirement to ensure that collection agencies engage in ethical business practices. The surety bond provides consumers with a means to recover financial losses resulting from fraudulent actions committed by the collection agency. There is no statewide license requirement for collection agencies in New Jersey.
What is the Purpose of the New Jersey Collection Agency Bond?
New Jersey requires collection agencies to purchase a surety bond as a prerequisite to conducting business. The bond ensures that the public will receive compensation for financial harm if the collection agency fails to comply with the regulations set forth in New Jersey statute 45:18-2. Specifically, the bond protects the public in the event the collection agency engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the collection agency commits fraud.
How Can an Insurance Agent Obtain a New Jersey Collection Agency Bond?
BondExchange makes obtaining a New Jersey 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 New Jersey Collection Agency Bond?
No, surety companies will not conduct a credit check during the underwriting process. Because the bond is considered relatively low risk, the same rate is offered to all collection agencies in New Jersey regardless of their credit history.
How Much Does the New Jersey Collection Agency Bond Cost?
The New Jersey Collection Agency bond costs just $100 per year or $10 per month.
How Does New Jersey Define Collection Agency?
The New Jersey Division of Revenue and Enterprise Services defines a collection agency as any business entity that collects payments from debtors on behalf of a third-party creditor.
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.
Do New Jersey Collection Agencies Need to Obtain a License?
No, there is no statewide licensing requirement for collection agencies in New Jersey. However, collection agencies may need to obtain a local business license prior to beginning operations. Insurance agents should advise their customers to check with their local municipal authority before conducting business.
What Are the Insurance Requirements for Collection Agencies in New Jersey?
New Jersey does not require collection agencies to obtain any form of liability insurance as a prerequisite to conducting business. Collection agencies must purchase and maintain a $5,000 surety bond.
How Do New Jersey Collection Agencies File Their Bonds?
Collection agencies should mail the completed bond applications, including the power of attorney, to the following address:
NJ Division of Revenue
Collection Agency Bonds
PO Box 453
Trenton, NJ 08646
The collection agency 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
- Date the bond is signed
Collection agencies will need to refile their bond annually.
What Can New Jersey Collection Agencies Do to Avoid Claims Against Their Bonds?
To avoid claims made against their bonds, collection agencies must follow all provisions contained within the bond form. Including some of the most important issues below that tend to cause claims:
- Pay all funds owed to creditors
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Collection Agencies in New Jersey?
New Jersey does not require collection agencies to purchase any form of liability insurance as a prerequisite to conducting business. 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 New Jersey Collection Agency Customers?
New Jersey unfortunately does not provide a public database to search for active collection agencies in the state. However, insurance agents can inquire about the bonding status of a specific business by sending a written request to the following address:
NJ Division of Revenue
Collection Agency Bond Unit
PO Box 453
Trenton, NJ 08646
Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.