Maine Refund Anticipation Loan Broker Bond: A Comprehensive Guide

June 18, 2021

This guide provides information for insurance agents to help their customers obtain Maine Refund Anticipation Loan Broker Bonds

*This article focuses solely on the bonding requirements for Maine loan brokers who issue refund anticipation loans. To learn about the bonding requirements for loan brokers who do not issue refund anticipation loans, click here

At a Glance:

• Average Cost: $100 per year
• Bond Amount: $10,000
• Who Needs it: All refund anticipation loan brokers operating in Maine
• Purpose: To ensure the public will receive compensation for any damages should the refund anticipation loan broker fail to comply with licensing law
• Who Regulates Refund Anticipation Loan Brokers in Maine: The Maine Bureau of Consumer Credit Protection

Background

Maine statute 10-201 requires all refund anticipation loan brokers operating in the state to obtain a license with the Bureau of Consumer Credit Protection. The Maine legislature enacted the licensing laws and regulations to ensure that loan brokers engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law,  refund anticipation loan brokers must purchase and maintain a $10,000 surety bond to be eligible for licensure.

What is the Purpose of the Maine Refund Anticipation Loan Broker Bond?

Maine requires refund anticipation loan brokers 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 loan broker fails to comply with the regulations set forth in Maine statutes 10-101 to 10-401. Specifically, the bond protects the public in the event the loan broker engages in any acts of fraud or fails to honor contractual obligations made with consumers. In short, the bond is a type of insurance that protects the public if the refund anticipation loan broker breaks licensing laws.

How Can an Insurance Agent Obtain a Maine Refund Anticipation Loan Broker Surety Bond?

BondExchange makes obtaining a Maine Refund Anticipation Loan Broker Bond easy. Simply login to your account and use our keyword search to find the “loan” 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 Maine Refund Anticipation Loan Broker Bond?

No, a credit check is not required for the Maine Refund Anticipation Loan Broker Bond. Because the bond is considered relatively low risk, surety companies issue the bond at the same rate to all applicants.

How Much Does the Maine Refund Anticipation Loan Broker Bond Cost?

The Maine Refund Anticipation Loan Broker Bond costs just $100 per year.

How Does Maine Define “Refund Anticipation Loan?”

Maine statute 10-102 defines a refund anticipation loan as a loan that is to be repaid directly or indirectly from the proceeds of a consumer’s income tax refund or tax credits. Additionally, a refund anticipation loan also includes any sale, assignment or purchase of a consumer’s tax refund.

How Does Maine Define “Loan Broker?”

Maine statute 10-102 defines a loan broker as any business entity who provides one or more of the following services:

• Improves a consumer’s credit record, history or rating
• Arranges for or obtains an extension of credit for a consumer
• Serves as a facilitator of a refund anticipation loan or refund anticipation check

Exemptions to this definition include:

• Supervised financial institutions/lenders and all their employees/affiliates
• Individuals licensed by the Real Estate Commission
• Individuals admitted to practice law in Maine
• Non-profit organizations
• Consumer reporting agencies

How do Refund Anticipation Loan Brokers Apply for a License in Maine?

Refund anticipation loan brokers in Maine must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.

License Period – The Maine Refund Anticipation Loan Broker License expires on July 31 of even numbered years (2022, 2024 etc) and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Refund anticipation loan brokers must purchase and maintain a $10,000 surety bond

Step 2 – Establish a Place of Business

All refund anticipation loan brokers must establish a permanent place of business that is in compliance with all local zoning ordinances. Additionally, brokers must prominently display a sign at their place of business that shows the schedule of current fees for a refund anticipation loan/check.

Step 3 – Complete the Application

All Maine Refund Anticipation Loan Broker License applications should be mailed to the following address:

State of Maine
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035

Brokers must complete the application in its entirety, and submit the following items:

• • Company contact information for the following purposes:
    • Scheduling of routine compliance examinations
    • Consumer complaint resolution
  • Sample written agreement with a consumer containing the following information:
    • Description of services offered
    • Guarantees or promises of a refund
    • Effective term of agreement
    • Terms of payment
    • Notice to consumer
  • Sample of the company’s written disclosures provides to consumers that contain the following information:
    • Fee schedule that includes at least 5 examples of refund anticipation loans in different amounts ranging from $300 to $5,000
    • Notice to consumers disclosing refund anticipation loans borrow against their tax refund (see specific language requirement in the application form 
    • Notice to consumers indicating the time within which the proceeds of the loan will be paid and the interest rate
    • Copy of the completed loan application agreement
    • Oral notification to the consumer disclosing the terms and structure of the loan
  • Professional resume and two professional letters of reference for each principal officer, owner, or partner

Refund anticipation loan brokers must pay a $600 license fee when submitting their application.

How Do Maine Refund Anticipation Loan Brokers Renew Their License?

Refund anticipation brokers should mail their completed renewal application to the following address:

State of Maine
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035

The Maine Refund Anticipation Loan Broker License expires on July 31 of even numbered years (2022, 2024 etc) and must be renewed before the expiration date

What Are the Insurance Requirements for the Maine Refund Anticipation Loan Broker License?

The State of Maine does not require refund anticipation loan brokers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Refund anticipation loan brokers must purchase and maintain a $10,000 surety bond.

How Do Maine Refund Anticipation Loan Brokers File Their Bond?

Refund anticipation loan brokers should mail the completed bond form, including the power of attorney, to the following address:

State of Maine
Bureau of Consumer Credit Protection
35 State House Station
Augusta, ME 04333-0035

The refund anticipation loan broker surety bond requires signatures from both the surety company that issues the bond and a representative from the lending company. 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 state of incorporation
• Date the bond is signed

What Can Maine Refund Anticipation Loan Brokers Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, refund anticipation loan brokers in Maine must follow all license 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
• Honor all contractual obligations with consumers

What Other Insurance Products Can Agents Offer Refund Anticipation Loan Brokers in Maine?

Maine does not require refund anticipation loan brokers 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 Maine Refund Anticipation Loan Broker Customers?

Maine conveniently provides a public database to search for active refund anticipation loan brokers in Maine. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.