Texas Credit Services Organization Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Texas Credit Services Organization Services Bond
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $10,000
- Who Needs it: All credit services organizations (CSOs) operating in Texas
- Purpose: To ensure the public will receive compensation for any damages should the credit services organization fail to comply with registration law
- Who Regulates Credit Services Organizations In Texas: The Texas Secretary of State
Background
Texas statute 74.1 requires all credit services organizations operating in the state to register with the Secretary of State. The Texas legislature enacted the registration laws and regulations to ensure that CSOs engage in ethical business practices. To provide financial security for the enforcement of the registration law, CSOs must purchase and maintain a $10,000 surety bond to be eligible for registration.
What is the Purpose of the Texas Credit Services Organization Bond?
Texas requires credit services organizations to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the CSO fails to comply with the regulations set forth in Texas code Title 5 Chapter 393. Specifically, the bond protects the public in the event the CSO 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 CSO breaks registration laws.
How Can an Insurance Agent Obtain a Texas Credit Services Organzation Bond?
BondExchange makes obtaining a Texas Credit Services Organization Bond easy. Simply login to your account and use our keyword search to find the “credit” 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.
Is a Credit Check Required for the Texas Credit Services Organization Bond?
No, a credit check is not required for the Texas Credit Services Organization Bond. Because the bond is considered relatively low risk, the same low rate is offered to all CSOs in Texas regardless of their credit history.
How Much Does the Texas Credit Services Organization Bond Cost?
The Texas Credit Services Organization Bond costs just $100 per year or $10 per month.
How Does Texas Define “Credit Services Organization”?
Texas statute 393.001 defines a credit services organization as any business entity who provides one or more of the following services:
- Improves a consumer’s credit history or rating
- Obtains an extension of credit for a consumer
How Do Credit Services Organizations Apply for Registration in Texas?
Credit services organizations in Texas must navigate several steps to secure their registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – The Texas Credit Services Organization Registration expires is valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Credit services organizations must purchase and maintain a $10,000 surety bond
Step 2 – Complete the Application
All Texas Credit Services Organization Registration applications should be mailed to the following address:
Secretary of State
Registrations Unit
P O Box 13193
Austin, TX 78711-3193
CSOs must complete the application in its entirety, and pay a $100 registration fee.
Step 3 – Obtain a License (If Applicable)
CSOs who assist consumers in obtaining extensions of consumer credit in the form of deferred presentment transactions or vehicle title loans are considered to be “credit access bureaus” and must obtain a license with the Office of the Consumer Credit Commissioner.
How Do Texas Credit Services Organizations Renew Their Registration?
Credit services organizations should mail their completed renewal application, including a $100 filing fee, to the following address:
Secretary of State
Registrations Unit
P O Box 13193
Austin, TX 78711-3193
The Texas Credit Services Organization Registration expires is valid for one year from the date of issuance and must be renewed before the expiration date.
What Are the Insurance Requirements for the Texas Credit Services Organization Registration?
Texas does not require credit services organizations to purchase any form of liability insurance as a prerequisite to obtaining a business registration. Credit services organizations must purchase and maintain a $10,000 surety bond.
How Do Texas Credit Services Organizations File Their Bond?
Credit services organizations should mail the completed bond form, including the power of attorney, to the following address:
Secretary of State
Registrations Unit
P O Box 13193
Austin, TX 78711-3193
The Texas Credit Services Organization Surety Bond requires signatures from both the surety company that issues the bond and a representative from the credit services organization. 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
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Texas Credit Services Organizations Do to Avoid Claims Against Their Bond?
To avoid claims against their bond, CSOs in Texas must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer Credit Services Organizations in Texas?
Texas does not require CSOs to purchase any form of liability insurance as a prerequisite to obtaining a business registration. Bonds are our only business at BondExchange, so we do not issue other types of 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 Texas Credit Services Organization Customers?
Texas conveniently provides a public database to search for active CSOs in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services