When it comes to telemarketers, surety bonds are a critical means of providing monetary protection and strengthening industry regulations. Why telemarketers need a surety bond. A telemarketing surety bond is essentially a binding contract between three parties. By purchasing the bond, the principal, in this case the telemarketing business, promises to uphold industry standards in getting the job done. The obligee is the government agency that ensures such a bond is taken out in the first place to get a permit to conduct telemarketing, and the surety is the underwriter issuing the bond for the principal. If a breach of the terms of the bond occurs, the obligee would make a claim against the principal, be proven right, and receive compensation from the surety. As opposed to some insurance scenarios, however, the principal does not get off scot-free. Instead, the principal is responsible for repayment of the surety for all losses resulting from the claim, much like paying down a loan.
There are many good reasons for telemarketers to take out a surety bond. Better performance is a very likely outcome since failing to adhere to the expectations laid out in the bond agreement will cause the business to lose money and deal with huge headaches. Often, surety bonds are not only a sign of integrity, showing clients how much your value quality work, but a legal necessity.
For instance, in Florida, a telemarketing business is required by law to carry a surety bond for 50,000 dollars in case of customer injury from bankruptcy or malfeasance. Also, having a surety bond is an important way to prove dedication and trustworthiness. Surety suppliers do not issue bonds willy-nilly—risk of financial losses are high, so insurance providers must be careful in assessing the trustworthiness and credit history of telemarketing hopefuls. They would never approve an application from anyone lacking proper financial credentials. The existence of surety bonds is beneficial to companies as well as consumers because it helps weed out would-be competitors from stealing business from reputable organizations.
Exact specifications of required surety bonds differ according to state, so it’s a smart idea to get in touch with the appropriate government agency in order to find out whether a bond is mandatory and what kind of form/amount of coverage will do the trick. As always, telemarketing businesses should never try to bend the rules and fly under the radar unless they want to face lawsuits, penalties, fines, license retraction, ruined reputation, etc., etc. Before anyone hears, “May I have a minute of your time?” at the end of the line, telemarketers should be sure to read the fine print and sign on the dotted line of a bond agreement.