West Virginia Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a West Virginia Collection Agency Bond
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $5,000 per office location
- Who Needs it: All collection agencies operating in West Virginia
- Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with registration law
- Who Regulates Collection Agencies In West Virginia: The West Virginia State Tax Department
The West Virginia Collection Agency Act of 1973 requires all collection agencies operating in the state to register with the State Tax Department. The West Virginia legislature enacted the registration laws and regulations to ensure that collection agencies engage in ethical business practices. To provide financial security for the enforcement of the registration law, collection agencies must purchase and maintain a $5,000 surety bond (for each office location) to be eligible for registration.
What is the Purpose of the West Virginia Collection Agency Bond?
West Virginia requires collection agencies 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 collection agency fails to comply with the regulations contained within the West Virginia Collection Agency Act of 1973. Specifically, the bond protects the public in the event the collection agency engages in any acts of fraud or fails to pay funds owed to creditors. In short, the bond is a type of insurance that protects the public if the collection agency breaks registration laws.
How Can an Insurance Agent Obtain a West Virginia Collection Agency Bond?
BondExchange makes obtaining a West Virginia 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 West Virginia Collection Agency Bond?
No, a credit check is not required for the West Virginia Collection Agency Bond. Because the bond is considered relatively low risk, the same low rate is offered to all West Virginia collection agencies regardless of their credit history.
How Much Does the West Virginia Collection Agency Bond Cost?
The West Virginia Collection Agency surety bond costs just $100 per year or $10 per month.
How Does West Virginia Define “Collection Agency?”
West Virginia statute 47-16-2 defines a collection agency as any business entity who engages in one or more of the following activities:
- Collects debts that are owed to a third party
- Collects their own debts using a fictitious name
- Sells forms used in collection proceedings
Exemptions to this definition include:
- Trust companies
- Savings and loan associations
- Building and loan associations
- Industrial loan companies
- Small loan companies
- Abstract companies doing an escrow business
- Real estate brokers/agents
- Express and telegraph companies
- Licensed attorneys
- Persons acting under a court order
- Persons collecting debts owed to another where:
- Both persons are related by common ownership
- The person collecting the debt acts only on behalf of the company owners
- Debt collection is not the principal business of the person collecting the debt
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 Registration in West Virginia?
Collection agencies in West Virginia must navigate several steps to secure their business registration. Below are the general guidelines, but applicants should refer to the registration statutes for details on the process.
Registration Period – The West Virginia Collection Agency Registration is valid for two years from the date of issuance 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 for each office location they operate
Step 2 – Purchase Workers’ Compensation Insurance
West Virginia requires all businesses with employees to purchase workers’ compensation insurance prior to obtaining a business registration
Step 3 – Complete the Application
All West Virginia Collection Agency Registration applications can be completed online through the State Tax Department’s registration portal. The registration process is fairly straightforward, and the State Tax Department will walk collectors through the process step by step. See the registration form and instruction booklet for more information on the registration process.
Collection agencies must pay a $30 fee when submitting their registration application.
How Do West Virginia Collection Agencies Renew Their Registration?
Collection agencies can renew their registration online through the State Tax Department’s registration portal. Registration holders need to simply login to their account to access their renewal application. The West Virginia Collection Agency Registration is valid for two years from the date of issuance and must be renewed before the expiration date.
What Are the Insurance Requirements for the West Virginia Collection Agency Registration?
West Virginia requires all businesses with employees to purchase workers’ compensation insurance prior to obtaining a business registration. Collection agencies must purchase and maintain a $5,000 surety bond for each office location they operate.
How Do West Virginia Collection Agencies File Their Bond?
Collection agencies should submit the completed bond form, including the power of attorney, electronically through the State Tax Department’s registration portal. 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 West Virginia Collection Agencies Do to Avoid Claims Against Their Bond?
To avoid claims made against their bond, collection agencies in West Virginia must follow all registration regulations in the state, including some of the most important issues below that, tend to cause claims:
- Properly account for all funds received
- Do not engage in any acts of fraud
- Pay all funds owed to creditors
What Other Insurance Products Can Agents Offer Collection Agencies in West Virginia?
West Virginia requires all businesses with employees to purchase workers’ compensation insurance. 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 West Virginia Collection Agency Customers?
West Virginia conveniently provides a public database to search for active collection agencies 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.