Idaho Collection Agency Bond: A Comprehensive Guide

April 30, 2021

This guide provides information for insurance agents to help collection agencies obtain Idaho Collection Agency Bonds

*For the purposes of this article, the term “Collection Agency” also includes all debt counselors, credit counselors, and credit repair organizations

At a Glance:

• Average Cost: Between $113 to $750 per year based on the applicant’s credit
• Bond Amount: $15,000 for first time license applicants, but the limit may be increased each renewal period at the discretion of the Idaho Department of Finance
• Who Needs it: All collection agencies seeking to obtain a license in Idaho
• Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with licensing law
• Who Regulates Collection Agencies in Idaho: The Idaho Department of Finance

Background

Idaho Statute 26-2223 requires all collection agencies operating in the state to obtain a license with the Department of Finance. The Idaho legislature enacted the licensing laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, collection agencies must purchase and maintain a $15,000 surety bond to be eligible for licensure.

What is the Purpose of the Idaho Collection Agency Bond?

Idaho requires collection agencies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the collection agency fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the collection agency breaks licensing laws.

How Can an Insurance Agent Obtain an Idaho Collection Agency Surety Bond?

BondExchange makes obtaining an Idaho 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? 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.

How is the Bond Amount Determined?

Idaho statute 26-2232A sets the limit of the Idaho Collection Agency bond at $15,000 for first time applicants for the Idaho Collection Agency License. Each renewal period, the Idaho Department of Finance may increase the bond amount if they deem it necessary.

Is a Credit Check Required for the Idaho Collection Agency Bond?

Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Idaho Collection Agency 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 Idaho Collection Agency Bond Cost?

The Idaho Collection Agency surety bond can cost anywhere between $113 to $750 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 a $15,000 bond requirement.

$15,000 Collection Agency Bond Cost

*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 Obtain a License?

Idaho statute 26-2223 requires all businesses who meet one or more of the following criteria to obtain a license:

• Operate as a collection agency, debt counselor, credit counselor, or credit repair organization in Idaho
• Engage, either directly or indirectly, in Idaho in the business of collecting or receiving payment for others of any account, bill, claim or other indebtedness
• Solicit or advertise in Idaho to collect or receive payment for another of any account, bill, claim or other indebtedness
• Sell or otherwise distribute in Idaho any system or systems of collection letters or similar printed matter where the name of any person other than the particular creditor to whom the debt is owed appears.
• Engage in any activity in Idaho which indicates, directly or indirectly, that a third party is or may be involved in effecting any collections.
• Engage or offer to engage in Idaho, directly or indirectly, in the business of collecting any form of indebtedness for that person’s own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired.
• Engage or offer to engage in Idaho in the business of receiving money from debtors for application or payment to or prorating of a debt owed to, any creditor or creditors of such debtor, or engage or offer to engage in Idaho in the business of providing counseling or other services to debtors in the management of their debts, or contracting with the debtor to effect the adjustment, compromise, or discharge of any account, note or other indebtedness of the debtor.
• Engage or offer to engage in Idaho in the business of selling, providing or performing services to improve any consumer’s credit record, credit history or credit rating, or providing advice or assistance to any consumer with regard to his credit record, credit history or credit rating

How do Collection Agencies Apply for a License in Idaho?

Collection agencies in Idaho must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – All Idaho Collection Agency Licenses expire on March 15 of every year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

First time applicants for the Idaho collection agency license must purchase and maintain a $15,000 surety bond

Step 2 – Hire a Qualifying Individual

Collection agencies must employ a qualified individual for every branch location the company operates. Qualified individuals must have necessary work experience and capabilities to run the day to operations of the branch office they are in charge of. License applicants must submit detailed work history documentation verifying the qualifying individual’s work experience.

Step 3 – Request a NMLS Account

The Idaho Collection Agency Bond application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 4 – Complete the Application

All Idaho Collection Agency License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Bank account information for all company operating and trust accounts
  • Trust Account Authorization Form
  • Work experience verification for qualifying individual(s)
  • Business plan detailing the following information:
    • Marketing strategy
    • Products
    • Target markets
    • Operating structure the applicant intends to employ in Idaho
  • Certificate of Good Standing obtained from the Idaho Secretary of State
  • Copy of the debt management agreement used between the company and debtor
  • Organizational chart detailing the company ownership structure
  • Collection Agency Quarterly Notification of Agents Form

Applicants for the Idaho Collection Agency License must pay a $150 application fee when submitting their application.

How Do Idaho Collection Agencies Renew Their License?

Collection Agencies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. All Idaho Collection Agency Licenses expire on March 15 of every year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Idaho Collection Agency License?

The State of Idaho does not require collection agencies to obtain any form of liability insurance as a prerequisite to obtaining a license. First time applicants for the Idaho collection agency license must purchase and maintain a $15,000 surety bond.

How Do Idaho Collection Agencies File Their Bond?

Collection agencies should submit the completed bond form, including the power of attorney, electronically through the NMLS. 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 of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount

What Can Idaho Collection Agencies Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, collection agencies in Idaho must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

• Properly account for all funds received from consumers
• Pay all funds received from consumers to the proper party

What Other Insurance Products Can Agents Offer Collection Agencies in Idaho?

Idaho does not require collection agencies to obtain any form of liability insurance as a prerequisite to obtaining a business license. However, many 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 Idaho Collection Agency Customers?

The NMLS conveniently provides a public database to search for active collection agencies in Idaho. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.