Wisconsin Seller of Checks Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Wisconsin Seller of Checks Bond

At a Glance:

• Lowest Cost: 1.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: $10,000 for the first office location plus $5,000 per additional office location to a maximum of $300,000
• Who Needs it: All check sellers operating in Wisconsin
• Purpose: To ensure the public will receive compensation for any damages should the check seller fail to comply with licensing law
• Who Regulates Check Sellers In Wisconsin: The Wisconsin Department of Financial Institutions

Background

Wisconsin statute 217.03 requires all check sellers operating in the state to obtain a license with the Department of Financial Institutions. The Wisconsin legislature enacted the licensing laws and regulations to ensure that check sellers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, check sellers must purchase and maintain a $10,000 surety bond to be eligible for licensure.

What is the Purpose of the Wisconsin Seller of Checks Bond?

Wisconsin requires check sellers 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 check seller fails to comply with the licensing regulations set forth in Wisconsin statute 217.06. Specifically, the bond protects the public in the event the check seller engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the check seller breaks licensing laws.

How Can an Insurance Agent Obtain a Wisconsin Seller of Checks Bond?

BondExchange makes obtaining a Wisconsin Seller of Checks Bond easy. Simply login to your account and use our keyword search to find the “check” 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.

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Is a Credit Check Required for the Wisconsin Check Seller Bond?

Surety companies will run a credit check on the owners of the check selling company to determine eligibility and pricing for the Wisconsin Check Seller Bond. Owners 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 Wisconsin Seller of Checks Bond Cost?

The Wisconsin Seller of Checks Bond can cost anywhere between 1.5% to 7.5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $10,000 bond requirement.

$10,000 Seller of Checks Bond Cost

How Does Wisconsin Define “Check Seller?”

To paraphrase Wisconsin Statute 217.02(9), a check seller is any business entity who sells checks or transmits money either domestically or to foreign countries.

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 Check Sellers Apply for a License in Wisconsin?

Check sellers in Wisconsin 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 – The Wisconsin Seller of Checks License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Wisconsin Seller of Checks License must maintain a company net worth (assets – liabilities) of at least $100,000. Check sellers must submit financial statements verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Check sellers must purchase and maintain a surety bond with a limit of $10,000 for the first office location plus $5,000 per additional office location to a maximum of $300,000

Step 3 – Request an NMLS Account

The Wisconsin Seller of Checks License 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 Wisconsin Seller of Checks License applications can be completed online through the NMLS. Completed applications will include the following items:

• • Company financial statements indicating a net worth of at least $100,000
  • Locations of all company authorized agents
  • The following company contacts:
    • Primary
    • Primary consumer complaint
    • Licensing
    • Pre-exam
    • Exam delivery
  • Disclosure questions
  • Company business plan containing the following information:
    • Marketing strategies
    • Products
    • Target markets
    • Fee schedule
    • Operating structure
    • Management team
  • Certificate of good standing 
  • The following document samples:
    • Checks to be sold to consumers
    • Receipts used with money transmission customers
    • Sample contract used with authorized agents
  • Flow of funds structure
  • Flow of funds structure detailing the company’s hierarchy

Check sellers must pay the following fees when submitting their license application:

• • $500 licensing fee
  • $300 investigation fee
  • $5 fee for each office location
  • $0.25 annual fee per authorized agent to a maximum of $25,000 (the first 100 agents are exempt)

How Do Wisconsin Check Sellers Renew Their License?

Check sellers can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Wisconsin Seller of Checks License expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Wisconsin Seller of Checks License?

Wisconsin does not require check sellers to obtain any form of liability insurance as a prerequisite to obtaining a business license. Check sellers must purchase and maintain a surety bond with a limit of $10,000 for the first office location plus $5,000 per additional office location to a maximum of $300,000.

How Do Wisconsin Check Sellers File Their Bond?

Check sellers 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 check selling company. 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
• Date the bond is signed

What Can Wisconsin Check Sellers Do to Avoid Claims Against Their Bond?

To avoid claims made against their bond, check sellers in Wisconsin must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

• Do not breach any contracts made with consumers
• Properly account for all funds received
• Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Check Sellers in Wisconsin?

Wisconsin does not require check sellers 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 Wisconsin Check Seller Customers?

The NMLS conveniently provides a public database to search for active check sellers in Wisconsin. 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.