The following is a guest contributed post from Vic Lance, the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded.
How to comply with surety bond requirements and stay away from bond claims are important issues for telemarketers. Yet it may be difficult to grasp the intricacies of how surety bonds work if you’re new to the bonding process.
In most states, telephone soliciting businesses need to obtain a state license. Typically, you also need to meet telemarketing bond requirements as a part of the procedure. The conditions and amounts vary from state to state, depending on the local legislation but the purpose is usually the same: to ensure that licensed telemarketers will comply with state and federal laws that govern their activities.
Here are the basics about bond compliance that you need to know, so that you can run your telemarketing company worry-free.
The bond requirements for licensing
Telemarketing bonds are a type of surety bonds whose goal is to ensure protection for consumers. They can provide a financial compensation in case you transgress from applicable state and federal rules. In most places, you need to obtain such a bond before you start conducting telephone soliciting. If you want to operate in more than one state, you have to check and comply with the bonding requirements for each one.
The bond criteria vary from state to state. For example, in Florida, Pennsylvania and Utah, you need to post a $50,000 bond to obtain your license. In California and Arizona, the bond amount is set at $100,000. Some states do not require a bond, such as Alaska, Colorado and Connecticut. Whenever you launch your licensing process, you will be able to see the precise requirement you have to meet.
In order to get bonded, you have to apply with a surety. It examines your personal and business finances and thus judges how risky it is to provide you with a bond. On the basis of this assessment, your bond premium is set. It is often between 1% and 5% of the required bond amount for applicants with solid finances.
What are bond claims?
As already noted, telemarketing bonds are a security instrument that protects the general public. Their purpose is to ensure a proper reimbursement to any harmed parties who have suffered losses due to potential illegal activities conducted by telemarketers. The mechanism for seeking such compensations is through a surety bond claim.
Consumers and other parties can file a claim against your bond in case you have engaged in prohibited telephone soliciting or other unlawful actions. The claim is investigated and if proven, you are liable to pay a compensation to the affected party. The maximum penal sum that claimants can seek is the bond amount you have posted, for example, $50,000 in the case of Florida.
When there is a legitimate claim, your surety may step up to compensate the harmed parties at first. However, according to the indemnity agreement that goes together with bonds, you need to repay all costs. This means that claims are ultimately your financial responsibility. Thus, the best course of action is to avoid such situations.
How to avoid telemarketing bond claims
The most secure way to avoid claims is to get well acquainted with and adhere to state and federal laws.
On the national level, this entails respecting the Federal Trade Commission’s Do Not Call Registry. Many states also have their own registries which have to be taken into account, so that you do not solicit people on such lists.
Some additional cases that you should avoid in order to prevent claims include:
- Unlawful use of automatic telephone dialer systems contacting mobile phones and pre-recorded solicitation
- Not making the mandatory disclosures required in your state in the beginning of each marketing call, as well as the federal mandatory disclosures
- Making misleading or untrue statements during calls
- Not informing the consumers whom you solicit about their cancellation rights
- Disrespecting telemarketing curfews which apply in your state
By following the requirements that govern your telemarketing activities on the state and federal levels, you can stay away from problematic situations.
Do you have further questions about telemarketing bond compliance? Don’t hesitate to leave a comment in the section below.