Consumers – Make Sure Your Collection Agency is Bonded

Published by admin | Filed under Uncategorized

The brutal national economy has created a busy season for one American industry: collection agencies.

Collection companies have been hopping during the last 18 months, trying to recover funds and erase bad debts from scores of consumers. Another industry has followed close behind: scammers.

Fraudulent collection agencies are cropping up across the country. So are instances of collection agencies violating state regulations or mismanaging funds in a ways that ultimately hurt companies and consumers.

Those are reasons why it’s key for consumers and companies alike to make sure a collection agency is properly bonded with their state of business. Collection agency bonds help ensure that collection companies follow the law and properly manage recovered money.

Surety bonds are three-way agreements between the state, a collection company and a surety. These agreements ensure that the company follows the rules and doesn’t harm consumers — if they do, the bond provides a way for consumers and companies to receive compensation.

It takes more than filling out an application to get a surety bond. Underwriters look at a collection agency’s financial history, management structure and credit profile. These are typically $5,000 bonds.

The degree of scrutiny that goes into surety bonds is a solid form of protection for consumers. So are the bonds themselves — companies that have a claim filed against their bonds don’t stay in business very long.

Scammer and frauds don’t care much for surety bonds. And that’s why consumers should. Investigate a collections agency as much as possible and try to determine their bonding status.

Check with your state Attorney General or Department of Consumer Protection or a similar agency. Ask the collections company outright about its bonding and licensing situation.

Take every precaution necessary to ensure you won’t wind up getting hurt.