Arkansas Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help collection agencies obtain Arkansas Collection Agency Bonds
At a Glance:
- Lowest Cost: $50 per year or $5 per month
- Bond Amount: Based on the number of collectors employed by the agency
Table 1.1
| Number of Collectors Employed | Bond Amount |
|---|---|
| 1 – 5 | $10,000 |
| 6 – 12 | $20,000 |
| 13+ | $25,000 |
- Who Needs It: All individuals and business entities seeking to obtain a collection agency license in the State of Arkansas
- 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 Arkansas: The Arkansas Board of Collection Agencies
Background
Arkansas Statute 17-24-301 requires collection agencies operating in the state to obtain a license with the Board of Collection Agencies. The Arkansas 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, collectors must purchase and maintain a collection agency surety (limits outlined in Table 1.1) bond to be eligible for licensure.
What is the Purpose of the Arkansas Collection Agency Bond?
Arkansas requires collectors to purchase the Collection Agency Bond as part of the application process to obtain a collection agency license. The bond ensures that the public will receive compensation for financial harm if the collector fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the collector breaks licensing laws.
How Can an Insurance Agent Obtain an Arkansas Collection Agency Surety Bond?
BondExchange makes obtaining an Arkansas 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? Gain access 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 Arkansas Collection Agency Bond?
Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Arkansas Collection Agency bond. Collectors with excellent credit and work experience can expect to receive the best rates. Collectors 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 collector’s credit.
How Much Does the Arkansas Collection Agency Bond Cost?
The Arkansas Collection Agency surety bond can cost anywhere between 0.75% to 5% of the bond amount per year. Monthly subscription options are also available. 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 $20,000 bond requirement.
$20,000 Collection Agency Bond Cost
Table 1.2
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $75 | $8 |
| 680 – 719 | $90 | $9 |
| 660 – 679 | $140 | $14 |
| 649 – 659 | $200 | $20 |
| 629 – 648 | $300 | $30 |
| 600 – 628 | $500 | $50 |
| 580 – 599 | $700 | $70 |
| 550 – 579 | $800 | $80 |
| 525 – 549 | $1,000 | $100 |
| 500 – 524 | $1,200 | $120 |
*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.
How Does Arkansas Define “Collection Agency”?
To paraphrase Arkansas Statute 17-24-101, a collection agency is any business entity that collects, or solicits to collect, debt payments on behalf of a third party.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Collection Agencies Apply for a License in Arkansas?
Collectors in Arkansas must navigate several steps to secure their collection agency license. Below are the general guidelines, but collectors should refer to the licensing statutes for details on the process.
License Period – The Arkansas Collection Agency License expires of June 30 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Collection agencies must purchase and maintain a collection agency surety bond (limits outlined in Table 1.1) or deposit cash
Step 2 – Designate a Manager
Applicants for the collection agency license must designate a manager who will oversee the day to operations of the agency. The manager must have experience in a related field, or be required to pass an examination administered by the Arkansas Board of Collection Agencies. License applicants must submit a completed Proposed Manager Information form with their application.
Step 3 – Complete the Application
All collection agency regulatory license applications should be mailed to:
Arkansas State Board of Collection Agencies
900 West Capitol Avenue, Suite 400
Little Rock, Arkansas 72201-9707
Collectors must complete the application, including the following steps:
3.a Organizational Chart – Collectors must include an organizational flow chart that details the company’s parent company, subsidiaries, and any affiliates
3.b Fees – Collectors must pay the following fees when submitting their license application
-
- $125 licensing fee
- $20 for the agency’s manager
- $20 for each solicitor/collector employed by the agency
How Does an Arkansas Collection Agency Renew Their License?
Collectors should submit their completed renewal application, including the appropriate fees, online here. The Arkansas Collection Agency License expires on June 30 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Arkansas Collection Agency License?
The State of Arkansas does not require collection agencies to obtain any form of liability insurance. Collection agencies must purchase and maintain a collection agency surety bond (limits outlined in Table 1.1).
How Do Arkansas Collection Agencies File Their Bond?
Collectors should mail the completed bond form, including the power of attorney, to the following address:
Arkansas State Board of Collection Agencies
900 West Capitol Avenue, Suite 400
Little Rock, Arkansas 72201-9707
The collection agency surety bond requires signatures from both the surety company that issues the bond and the collector. 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, address, and phone number
- Bond amount
- Date the bond is signed and goes into effect
What Can Collectors Do to Avoid Claims Against the Arkansas Collection Agency Bond?
To avoid claims on the Collection Agency Bond, collectors must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Ensure that money collected is paid to the proper parties
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Collection Agencies in Arkansas?
Arkansas does not require collection agencies to obtain any form of liability insurance. However, most reputable agencies 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 Arkansas Collection Agency Customers?
Arkansas conveniently provides a public database to search for active collection agencies 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
What other Financial Service Bonds are Required in Arkansas?
Arkansas requires businesses to purchase specific bonds correlating with their license type. Below are all the different financial services bonds required by the State of Arkansas:
- Money Transmission: Custom bond limit
- Mortgage Broker: Bond limit ranges from $100,000 to $200,000
- Mortgage Servicer: Bond limit ranges from $100,000 to $200,000
- Mortgage Banker: Bond limit ranges from $100,000 to $200,000