California Debt Collector Surety Bond
California collection agencies license and bond requirements
The Department of Financial Protection and Innovation (DFPI) requires debt collectors have a license to legally collect consumer debts from California residents. This license requirement is part of SB 908, the Debt Collection Licensing Act (DCLA). It’s one of many consumer protection bills enacted in California.
Part of the licensing requirement is to purchase a surety bond in the minimum amount of $25,000. The DFPI accepts this bond as your guarantee you’ll abide to all their set rules and regulations for the license. And, you will not initiate any abusive, deceptive or unlawful practices. A few examples of these abusive actions include threating consumers with arrest, non-stop consecutive phone calls or using profane language.
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What is the purpose of a surety bond? [What happens with a claim?]
The surety bond functions differently than a standard insurance policy. A bond is required by the DFPI to protect the consumer, not you as the licensee. Failure to uphold your agreement to follow the DFPI rules could result in a consumer making a claim against your bond. In this situation, the surety investigates the submitted claim. A valid claim results in the surety company paying out to the claimant, without exceeding the full amount of the bond. As the principal of the bond, you must make the surety financially whole.
How much does a surety bond cost?
Applicants with a good credit score can expect to pay around 1%-3% of the total bond amount. After you receive quotes for your bond, you can pay the full cost (known as the premium) up front for the designated term length of the bond. Getting quotes and paying for your bond is hassle-free and all completed online. At approximately ninety days before your bond expires, you will receive a renewal notification to ensure your bond stays active with the state.
Am I eligible for a bond with bad credit?
You may receive approval for your surety bond even if your credit score is not the best. We have surety partners that accept applicants with non-standard credit. Depending on approval from the surety, your premium can fall between 5% – 15% of the bond amount. The increase in premium is due to the additional risk the surety takes on issuing the bond. Getting a quotes is easy and there is no obligation to purchase. Also, our credit check involves a soft-pull, so your credit is not adversely affected.
How to get a Debt Collection License in California?
Submit the following to the Commissioner of Business Oversight:
- Completed license application
- Include your principal place of business and every branch office location
- Pay the non-refundable application and investigation fees (Amounts determined by the DFPI)
- Includes processing fingerprints and criminal history check
- Purchase and maintain a surety bond (minimum amount of $25,000 determined by the commissioner)
If you have any questions about the license or license application, please contact the DFPI by emailing [email protected].
What's the best surety company in California?
For quick, hassle-free online surety bond quotes in California or anywhere else in the United States, apply with Surety Solutions, A Gallagher Company. Our partnerships with leading surety companies ensures you get your bond at the best value.
Contact our bond experts for any surety questions by emailing [email protected].
Additional Resources
Understanding the bond obligations is important when getting your license.
View answers to frequently asked questions about bonds.
Watch our video on how surety bonds work.
Do you need another type of bond?
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