Who Needs a Collection Agency License?
Oregon authorizes collection agencies to operate in the state through a registration process rather than through licensing. All of the following entities are required to be registered as a collection agency:
- Parties that collect third-party debt or repossess collateral
- Businesses that furnish or sell collection system forms
- Individuals using a fictitious name to collect their own debt
It is illegal to operate as a debt collector without being properly licensed.
What Does the Licensing Process Involve?
Oregon uses the National Mortgage Licensing System (NMLS) to process applications for new or renewal collection agency licenses. But it�s the Oregon Division of Financial Regulation (DFR) that supervises and registers collection agencies. Before applying for a license, the business must be properly registered with the Oregon Secretary of State.
The steps in the registration process include:
- Complete the Oregon Collection Agency application forms available on NMLS. Separate forms are required for a collection agency and its branches, and the collection agency registration must be approved before a branch registration can be completed. The Company form (MU1) is the form used to apply for a collection agency registration. The Individual form (MU2) must be completed by the designated control person and submitted with the Company form.
- Gather the documents that must be uploaded to NMLS along with the completed application form. These include the company’s business plan and certified copies of the company’s formation documents, and a completed and signed Criminal Background and Credit Check Authorization Form for each owner, partner, or manager of the business. A Request for Waiver form is required for collection agencies that do not have a head office or trust account in Oregon.
- Obtain a surety bond in the amount of $10,000 for a collection agency located in Oregon or $15,000 for an out-of-state agency submitting a Request for Waiver form. The bond must be in electronic form for submission through NMLS. Get Bonded Now.
- Pay the collection agency registration fee (currently $350), and submit the completed application, accompanying documents, and surety bond through NMLS for approval.
Why is a Surety Bond Required?
The purpose of the surety bond is to ensure that a registered collection agency will operate in compliance with all applicable laws and regulations, including the Fair Debt Collection Practices Act (FDCPA). The bond also provides financial protection for any party that suffers a financial loss stemming from the unlawful or unethical business conduct of the collection agency.
How Does It Work?
Any violation of the terms of the surety bond agreement, which is a legally binding contract, entitles an injured party to file a claim against the collection agency�s surety bond and be compensated for their loss. The first thing the surety company will do when a claim is filed is investigate to make sure the claim is valid.
The collection agency is legally responsible for paying all valid claims against the bond. Often, the surety company will pay a claim up front and then collect reimbursement from the collection agency. Every surety bond agreement includes a clause that indemnifies the surety company and obligates the collection agency to repay it for any claims paid in advance on behalf of the agency.
Understanding the Process: How Surety Bonds Work for Licensing
The annual premium for any surety bond is a small percentage of the required bond amount. The surety company decides what that percentage will be for each bond applicant, based largely on the personal credit score of the company�s owner(s).
Personal and business financial details and prior industry experience are also considered. Applicants with good credit usually pay a premium rate of between 1% and 3%. Applicants with poor credit could pay a higher premium rate but should still be able to get bonded.
Get Bonded Today
Request an online quote today for the Oregon collection agency surety bond you need to obtain your license, or call to discuss your bonding needs with one of our experts.