What You Need to Know About Telemarketing Bonds

The telemarketing industry is heavily regulated by both state and federal laws. While many of these laws are designed to protect consumers from telemarketing abuse, fraud, and other violations, they can also level the playing field for telemarketers who use ethical practices. Telemarketing bonds have a similar purpose. They essentially act as a guarantee that you, the phone solicitor or telemarketer, will act responsibly with the money and personal information you collect from customers.

In most states, telemarketing companies are legally required to maintain an active telemarketing bond, which is a type of surety bond. It acts as a kind of insurance that you will abide by the state’s telemarketing regulations. Oftentimes you must purchase the bond before you renew or apply for a business license. If you plan to call into multiple states, make sure you research their individual telemarketing laws, because you may need to post an additional bond for each state.

Some states do not require telemarketing bonds at all. In others, you will only need one depending on certain factors, such as the type of products or services you sell, where you get your call list, and whether you dial phone numbers manually or automatically.

The face amount of a telemarketing bond varies state by state. Telemarketers may post the face amount or more often, pay a premium to a bond company to post it for them.  Because bond regulations are established independently by the state, there are marked differences between the face amounts and premiums in the various states. For instance, while telemarketers operating in Texas must generally post $10,000 as a surety bond, the face amount is $25,000 in New York and $50,000 in Florida.

You may need an additional bond in some states, like in California, where telemarketers must post $100,000 and another surety bond if they offer certain promotions valued at $500 or more. The products you sell can also affect the cost of your premiums, because some markets are considered “riskier” than others. The bonds are subject to underwriting, so the amount you pay will depend on your credit score and financial history.

Your telemarketing bonds remain valid for one year, and you can renew them on an annual basis. They usually only requires a one-time payment and some paperwork every time you apply. If you’re not sure whether your company requires a telemarketing bond, or you would like information about the cost, application process, or other details, you should consult a telemarketing attorney. The dedicated attorneys at Cove Law can provide you with the accurate, focused information you need to make the right decisions for your business. Give us a call to start your bond application.

Written by Andrew Cove

Cove Law has significant experience defending federal investigations and formal actions by the Federal Trade Commission, the Consumer Finance Protection Board and the U.S. Department of Justice, as well as similar matters on the state level by the respective state Attorney General’s Offices and other local agencies.