West Virginia Credit Services Organization Bond: A Comprehensive Guide

September 10, 2021

This guide provides information for insurance agents to help their customers obtain a West Virginia Credit Services Organization Bond

At a Glance:

• Average Cost: $150 per year
• Bond Amount: $15,000
• Who Needs it: All West Virginia credit services organizations (CSOs) who accept advance payments before providing any services
• Purpose: To ensure the consumers will receive compensation if the CSO fails to provide any services that have been paid for
• Who Regulates Credit Services Organizations In West Virginia: The West Virginia Secretary of State

Background

West Virginia Statute 46A-6C requires all credit services organizations operating in the state to register with the Secretary of State. The West Virginia legislature enacted the registration laws and regulations to ensure that CSOs engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, CSOs who accept advance payments must purchase and maintain a $15,000 surety bond to be eligible for registration.

What is the Purpose of the West Virginia Credit Services Organization Bond?

West Virginia requires credit services organizations who accept advance payments 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 provide any services that have been paid for in advance. CSOs who do not accept funds before providing services are exempt from the bonding requirement.

How Can an Insurance Agent Obtain a West Virginia Credit Services Organization Bond?

BondExchange makes obtaining a West Virginia 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? 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 West Virginia Credit Services Organization Bond?

No, a credit check is not required for the West Virginia Credit Services Organization Bond. Because the bond is considered relatively low risk, the same low rate is offered to all West Virginia CSOs regardless of their credit history.

How Much Does the West Virginia Credit Services Organization Cost?

The West Virginia Credit Services Organization surety bond costs just $150 per year.

How Does West Virginia Define “Credit Services Organization”?

West Virginia Statute 46A-6C-2 defines a credit services organization as any business entity who provides one or more of the following services:

• Improving a buyer’s credit record, history or rating
• Obtaining an extension of credit for a buyer

Exemptions to this definition include:

• Businesses authorized to makes loans or issue credit
• Banks and savings and loan associations
• Credit unions
• Nonprofit organizations
• Real estate brokers and salespersons
• Licensed attorneys
• Consumer reporting agencies
• Businesses whose primary purposes is making loans secured by liens on real property
• Auto dealers who don’t extend credit
• Public accountants

Mortgage brokers and lenders who do not meet any of the above exemptions are required to register as a credit services organization

How do Credit Services Organizations Obtain a Registration in West Virginia?

CSOs in West Virginia 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 West Virginia Credit Services Registration does not expire unless surrendered or revoked. CSOs must update their registration statement within 19 days of any changes to the information contained therein.

Step 1 – Purchase a Surety Bond

CSOs who accept advance payments must purchase and maintain a $15,000 surety bond

Step 2 – Purchase Insurance

West Virginia requires all businesses with employees to purchase workers’ compensation insurance

Step 3 – Register With the State Tax Department

All West Virginia businesses must register with the State Tax Department. To register, CSOs simply need to follow the steps contained within the registration portal and pay a $30 fee.

Step 4 – Register With the Secretary of State

After obtaining their business registration from the State Tax Department. CSOs must then submit their registration application with the Secretary of State. CSOs can email their completed registration application to either CorpFilings@wvsos.gov (standard) or efilings@wvsos.gov (expedited). CSOs must complete the application in its entirety, and pay a $50 registration fee.

Do West Virginia Credit Service Organizations Need to Renew Their Registration?

No, the West Virginia Credit Services Registration does not expire unless surrendered or revoked. CSOs must update their registration statement within 19 days of any changes to the information contained therein.

What Are the Insurance Requirements for the West Virginia Credit Services Organization Registration?

West Virginia requires all businesses with employees to purchase workers’ compensation insurance prior to obtaining a business registration. CSOs who accept advance payments must purchase and maintain a $15,000 surety bond.

How Do West Virginia Credit Service Organizations File Their Bond?

Credit services should submit the completed bond form, including the power of attorney, via email to either CorpFilings@wvsos.gov (standard) or efilings@wvsos.gov (expedited). The 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 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 Credit Services Organizations Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, CSOs in West Virginia 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 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 Credit Services Organization Customers?

West Virginia conveniently provides a public database to search for active credit services organizations in West Virginia. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.