Who Needs a Collection Agency License?
To operate as a debt collector in Minnesota, you must be licensed by the Minnesota Department of Commerce. Agencies must be licensed, and individual debt collectors working for an agency must be registered. There is an exception for out-of-state agencies that collect debts incurred in another state by Minnesota residents if collection activities are conducted by phone, mail, e-mail, or fax only.
What Does the Licensing Process Involve?
While the Minnesota Department of Commerce regulates and oversees the debt collection industry in the state, Pulse Portal, a credentials management system, handles the processing of license applications. Pulse Portal makes it possible to apply for a new collection agency license or renew an expiring one entirely online. Here are the main steps in the process:
- Access PulsePortal and complete the application for a collection agency license. A separate application must be submitted by each branch of a collection agency. Certain supporting documents must be uploaded at the end of the application (or emailed to the Department of Commerce): A copy of the business name approval or Certificate of Assumed Name previously filed with the Minnesota Secretary of State; Disclosure of Owners, Officers, and Partners form; Financial Statement form
- Pay the initial registration fee (currently $1,000 for the agency and $500 for a branch location) and the small application fee.
- Use the State ID and PIN number from page 2 of the license to set up an account for your agency on PulsePortal. This account will enable you to submit registration applications for individual debt collectors. You have 30 days from approval of the agency license to get at least one Minnesota debt collector registered and affiliated with the agency, or the agency license can be canceled.
- Submit a Minnesota debt collection agency bond for each of the agency�s licensed locations in the state. A copy of the application confirmation page from PulsePortal must be submitted along with the bond. Get Bonded Now.
Why is a Surety Bond Required?
The collection agency bond protects the state and consumers against financial loss resulting from the agency�s unlawful or unethical debt collection practices. The bond is the agency�s guarantee to abide by all applicable laws and regulations.
How Does It Work?
The surety bond agreement is a legally binding contract that establishes the conduct required to remain in compliance with the law and avoid claims against the bond. Any violation gives the injured party the right to file a claim and be compensated up to the full required (or penal) amount of the bond. That amount is based on the agency�s revenues from Minnesota debtors during the previous calendar year, with a minimum bond amount of $40,000 and a maximum of $100,000.
If the surety company determines that a claim is valid, and the collection agency doesn�t pay it right away, the surety typically will pay it in advance on behalf of the agency. An indemnification clause in the surety bond agreement makes the collection agency solely responsible for paying claims and legally obligated to reimburse the surety company for such advance payments.
Understanding the Process of Obtaining a Collection Agency License
The annual premium for a Minnesota collection agency bond is a small percentage of the required bond amount. The surety company decides what that percentage, the premium rate, will be based on the personal credit score of the agency�s owner(s) and both personal and business financials. Applicants with outstanding credit can pay as little as 1% of the required bond amount, while those with lesser credit could be assigned a higher premium rate.
Get Bonded Today
Look no farther for the collection agency bond you�ll need to obtain or renew your collection agency license. Request a quote online or call and speak with one of our expert surety agents today.