Indiana Credit Service Organization Bond: A Comprehensive Guide
May 12, 2021
This guide provides information for insurance agents to help credit service organizations obtain Indiana Credit Service Organization Bonds
At a Glance:
- Average Cost: Between $250 to $1,250 per year based on the applicant’s credit
- Bond Amount: $25,000
- Who Needs it: All credit service organizations and foreclosure consultants operating in Indiana
- Purpose: To ensure the public will receive compensation for any damages should the credit service organization violate consumer protection law
- Who Regulates Credit Service Organizations in Indiana: The Indiana Office of the Attorney General
Background
Indiana Code 24-5-15 requires all credit service organizations and foreclosure consultants to file a $25,000 surety bond with the Office of the Attorney General prior to conducting business operations. The Indiana legislature enacted the bonding requirement to ensure that credit service organizations engage in ethical business practices. Credit service organizations are not required to obtain a license, but instead must file a $25,000 surety bond with the Office of the Attorney General to be eligible to conduct business.
What is the Purpose of the Indiana Credit Service Organization Bond?
Indiana requires credit service organizations and foreclosure consultants to purchase a surety bond prior to conducting business operations. The bond ensures that the public will receive compensation for financial harm if the credit service organization fails to comply with consumer protection law set forth in Indiana statute 28-1-29-3. Specifically, the bond protects consumers in the event the credit service organization commits any fraudulent or deceptive acts. In short, the bond is a type of insurance that protects the public if the credit service organization breaks consumer protection laws.
How Can an Insurance Agent Obtain an Indiana Credit Service Organization Surety Bond?
BondExchange makes obtaining an Indiana Credit Service 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? Enroll 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 Indiana Credit Service Organization Bond?
Surety companies will run a credit check on the owners of the credit service organization to determine eligibility and pricing for the Indiana credit service organization bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Indiana Credit Service Organization Bond Cost?
The Indiana Credit Service Organization surety bond can cost anywhere between $250 to $1,250 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $25,000 bond requirement.
$25,000 Credit Service Organization Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $250 |
| 680 – 799 | $375 |
| 650 – 679 | $500 |
| 600 – 649 | $1,000 |
| 450 – 599 | $1,250 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase a Bond?
Indiana Code 24-5-15-2 mandates that all business entities who perform one or more of the following services purchase a $25,000 surety bond:
- Improves a buyer’s credit record, history, or rating
- Obtains an extension of credit for a buyer
- Obtains a delay or forbearance of a buyer’s obligation under a mortgage
- Obtains a lower interest rate for:
- Consumer loans
- Residential mortgage loans to which the buyer is a debtor or a prospective debtor.
- Provides debt settlement services on behalf of a buyer
Do Credit Service Organizations in Indiana Need to Obtain a License?
No, Indiana credit service organizations are not subject to any licensing requirements. The only regulatory requirement credit service organizations and foreclosure consultants must meet prior to conducting business is file a $25,000 surety bond with the Office of the Attorney General.
What Are the Insurance Requirements for Indiana Credit Service Organizations ?
The State of Indiana does not require credit service organizations to obtain any form of liability insurance as a prerequisite to conducting business. Credit service organizations must purchase and maintain a $25,000 surety bond.
How Do Indiana Credit Service Organizations File Their Bond?
Credit service organizations should mail the completed bond form, including the power of attorney, to the following address:
Office of the Indiana Attorney General
Consumer Protection Division
302 W. Washington St., 5th Floor
Indianapolis, Indiana 46204
The credit service organizations surety bond requires signatures from both the surety company that issues the bond and a representative from the credit service organization. The surety company should include the following information on the bond form:
- Legal name, city, and state of entity/individual(s) buying the bond
- Surety company’s name and state
What Can Indiana Credit Service Organizations Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, credit service organizations in Indiana must follow all provisions set forth in the bond form. Including some of the most important issues below that tend to cause claims:
- Do not charge money to refer a buyer to a retail seller that will extend the buyer’s credit if the extension of credit is made upon substantially the same terms as those available to the general public
- Do not make or advise a buyer to make a statement with respect to the buyer’s creditworthiness, credit standing, or credit capacity that is:
- False or misleading
- That should be known by the exercise of reasonable care to be false or misleading to a consumer reporting agency or to a person that has extended credit to the buyer or to whom the buyer is applying for an extension of credit
- Do not make or use a false or misleading representation in an offer to sell or a sale of the services of a credit services organization
- Do not take a power of attorney from a buyer for any purpose other than inspecting documents as provided by law
What Other Insurance Products Can Agents Offer Credit Service Organizations in Indiana?
Indiana does not require credit service organizations 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 Indiana Credit Service Organization Customers?
Indiana conveniently provides a public database to search for active credit service organizations 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.
