To get a New Jersey collection agency license, you file a $5,000 surety bond with the Division of Revenue and Enterprise Services and pay a $25 filing fee. The state doesn’t issue a traditional license at all. Under the Collection Agency Bond Act (N.J.S.A. 45:18-1 et seq.), that bond on file is what authorizes you to collect debts for others, and you have to renew it every year.1State of New Jersey. Division of Revenue and Enterprise Services – File Collection Agency Bonds
Who Has to File
N.J.S.A. 45:18-1 reaches anyone who runs a collection agency, collection bureau, or collection office in New Jersey, or who collects or receives payment on behalf of another party for any debt. It also covers anyone who advertises or solicits the right to collect debts for others.2Justia. New Jersey Code 45-18-1 – Collection Agencies to File Bond
What you call the business doesn’t matter. If the practical effect is collecting money owed to someone else, the bond requirement applies. An agency acting on behalf of another entity still triggers the filing obligation for the principal.
Who Is Exempt
N.J.S.A. 45:18-6 exempts three categories from the entire chapter:3Justia. New Jersey Code 45-18-6 – Exemptions
- Attorneys licensed to practice in New Jersey, when collecting as part of legal practice.
- National banks chartered under federal law.
- Banks and trust companies incorporated under New Jersey law.
The list is short. Real estate agents, insurance companies, medical billing services, and other businesses that handle collections as a side activity are not exempt. The attorney exemption only covers collection work done within legal practice; an attorney running a separate collection agency as a standalone business needs the bond for that entity.
The Bond and What It Covers
The required amount is $5,000. N.J.S.A. 45:18-2 provides that the bond guarantees the agency will turn over collected proceeds to the creditor according to their agreement.4New Jersey Department of the Treasury. New Jersey Division of Revenue – Collection Agency Bond Application Instructions It’s filed “for the use of any party aggrieved,” so a creditor who gets shortchanged can make a claim against it, and the surety covers the loss up to the $5,000 limit.
How to File
Get the Surety Bond
Obtain a $5,000 surety bond from a company authorized to transact surety business in New Jersey. The state does not accept bonds backed by individual sureties, though cash deposits may be accepted in place of a surety bond.4New Jersey Department of the Treasury. New Jersey Division of Revenue – Collection Agency Bond Application Instructions The surety will evaluate your financial standing before issuing the bond.
The bond document must include the full name and address of the collection agency as principal and the full name and address of the surety. Both the agency principal and the surety representative must sign it, and the surety’s corporate seal must appear on the bond.
Submit the Application
Mail the completed bond application with a $25 filing fee to:1State of New Jersey. Division of Revenue and Enterprise Services – File Collection Agency Bonds
NJ Division of Revenue
Collection Agency Bonds
PO Box 453
Trenton, NJ 08646
Make the check or money order payable to the Treasurer of the State of New Jersey. Once the bond is examined and approved, the state confirms your registration and you can begin operations.
Annual Renewal
The bond runs one year from its date and must be renewed annually. Each year you submit a new bond application with a current bond and the $25 filing fee.4New Jersey Department of the Treasury. New Jersey Division of Revenue – Collection Agency Bond Application Instructions Liability doesn’t end when a term does: any party claiming harm has two years after a bond expires to bring an action against it.
A lapsed bond means you are operating illegally. The state tracks current filings, and anyone doing business with you can verify your status in writing to the Collection Agency Bond Unit at the same PO Box 453 address at no cost.5New Jersey Department of the Treasury. Division of Revenue and Enterprise Services – Check on Collection Agency Bonds
Penalties for Operating Without a Bond
Under N.J.S.A. 45:18-5, any individual, partnership member, or corporate officer who fails to comply faces a fine of up to $500, imprisonment of up to three months, or both.6Justia. New Jersey Code 45-18-5 These are criminal penalties. Creditors who discover their collection agency lacks proper registration may also terminate contracts immediately, and courts may question the agency’s standing in debt collection lawsuits if its registration is not current.
Federal FDCPA Compliance
Filing the New Jersey bond handles the state side. Collection agencies must also comply with the federal Fair Debt Collection Practices Act, which applies to anyone whose principal business is collecting debts owed to others, or who regularly collects such debts.7Office of the Law Revision Counsel. 15 U.S. Code 1692a – Definitions Nearly every agency that needs a New Jersey bond also falls under the FDCPA.
One limit worth knowing: the FDCPA only covers consumer debts, meaning obligations incurred primarily for personal, family, or household purposes. An agency that exclusively collects commercial or business debts is outside the FDCPA, but still needs the New Jersey bond.
Validation Notice
Within five days of first contacting a consumer about a debt, you must send a written notice stating the amount owed, the name of the creditor, and the consumer’s 30-day right to dispute the debt.8Office of the Law Revision Counsel. 15 USC 1692g – Validation of Debts If the consumer disputes in writing within those 30 days, you must stop collection activity on the disputed portion until you obtain and mail verification. Missing or burying this notice is one of the most common FDCPA violations by new agencies.
Communication Rules
The FDCPA presumes calls before 8 a.m. or after 9 p.m. local time are inconvenient and off limits. Regulation F bars a debt collector from calling a consumer more than seven times within seven consecutive days about the same debt, and from calling again about that debt for seven days after a phone conversation.9eCFR. 12 CFR 1006.14 Every call must include meaningful disclosure that the caller is a debt collector.10Office of the Law Revision Counsel. 15 USC 1692d – Harassment or Abuse
Prohibited Conduct
The FDCPA bars threats of violence, obscene language, published “shame lists” of consumers, and advertising debts for sale to coerce payment.10Office of the Law Revision Counsel. 15 USC 1692d – Harassment or Abuse Collectors cannot misrepresent the amount owed, falsely claim to be attorneys or government officials, or threaten lawsuits they do not intend to file. Violations expose the agency to private lawsuits with statutory damages of up to $1,000 per case plus actual damages and attorney fees.