Credit service organization bond cost
The Division of Consumer Protection of the Utah Department of Commerce requires that all applicants wishing to become a Utah credit service organization (CSO)—sometimes called a credit repair company—must first submit a $100,000 surety bond as part of the registration process. Because of the risk associated with these bonds, as well as the large amount, applications must be submitted to underwriters, who will then review the applicant’s credit in order to determine an adequate premium amount that must be paid prior to issuing the bond. Applicants with exceptional credit may qualify to pay an annual premium of as little as 2% of the total bond amount!
Why this bond
Credit service organization bonds are obtained in order to protect the division, as well as all consumers, from suffering financial loss or damage due to the credit repair company’s failure to comply with state regulations—specifically by engaging in any prohibited activity included in Utah Code 12–21–3.
Should loss occur on the part of the division or the consumer, a claim of up to $100,000 may be brought against the CSO’s bond. Because the surety assumes that there will be no risk of financial loss when issuing these bonds, if a claim is made against the bond and the surety has to pay to settle it, then the CSO is responsible for ensuring that the surety is repaid.
Why this bond
Surety bonds for credit service organizations in Utah are continuous and must be renewed annually—a process that must be repeated until one year after the credit servicing organization notifies the division in writing that it has ceased operations. However, the surety company does have the option to cancel the bond at any point during the term by providing 90 days’ advance notice in writing to the Division of Consumer Protection. If a CSO bond is canceled, the organization must contact.
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