Texas Credit Services Organization Surety Bond
Texas credit services organizations that accept payment from consumers before completely performing the agreed services generally must maintain financial security for each location.
A $10,000 Credit Services Organization Surety Bond is one way to satisfy that Texas security requirement.
What Is a Credit Services Organization?
Texas law uses the term Credit Services Organization, commonly shortened to CSO, for certain businesses that provide credit-related services to consumers for payment.
A CSO may provide or represent that it can provide services such as:
- Improving a consumer’s credit history or credit rating.
- Helping a consumer obtain an extension of consumer credit.
- Providing advice or assistance relating to those services.
Credit repair companies are a common example of businesses that may fall within the Texas definition of a Credit Services Organization.
CSOs Generally Must Register Before Doing Business in Texas
Secretary of State Registration
Unless an exemption applies, a Credit Services Organization must register with the Texas Secretary of State before conducting business in Texas.
A CSO registration is effective for one year and may be renewed.
The current filing fee for an original registration or renewal is $100.
Registration Is Now Online
The Texas Secretary of State now requires CSO registrations through its online SOSPortal.
Paper registration submissions are no longer accepted. Completed security documentation can be uploaded as part of the online registration process.
When Is a Texas CSO Surety Bond Required?
The Key Issue Is Advance Payment
According to the Texas Secretary of State, a security deposit is generally required when consumers will be charged or will pay before the Credit Services Organization has completely performed all of the services it agreed to provide.
In that situation, the organization must obtain a surety bond for each location or establish and maintain an acceptable surety account for each location.
Texas Requires $10,000 of Security Per Location
Surety Bond Amount
The current Texas Credit Services Organization Surety Bond amount is $10,000.
This is the bond’s penal amount, not necessarily the amount you pay to purchase the bond.
Multiple Locations
Each CSO location must have its own security.
Additional locations may be added to a CSO’s registration, but a separate $10,000 security requirement applies to each location.
What Does the CSO Bond Protect?
The bond is issued in favor of the State of Texas for the benefit of people who are damaged by a violation of Chapter 393 of the Texas Finance Code by the bonded Credit Services Organization.
The current Texas bond form provides that an injured party may bring an action based on the bond. The surety’s liability is limited by the bond terms and cannot exceed the stated bond amount.
The bond protects consumers; it is not business liability insurance for the Credit Services Organization.
Surety Bond or Surety Account
$10,000 Surety Bond
A qualifying CSO can purchase a $10,000 surety bond from an authorized surety company.
Texas uses Form 2802 for the Credit Services Organization Surety Bond.
Find CSO Surety Bond$10,000 Surety Account
Texas also permits a CSO to establish a qualifying surety account rather than purchasing a surety bond.
Texas uses Form 2803 for the Surety Account Notice for a Credit Services Organization.
Important: A Texas Bond Does Not Automatically Make Every Advance Fee Legal
Texas Chapter 393 permits advance fees in certain circumstances when the CSO has the required security. However, the Texas Secretary of State specifically warns that other federal or state laws may separately restrict advance fees.
The Secretary of State notes that many CSOs should also review the Federal Trade Commission’s Telemarketing Sales Rule. A surety bond should not be treated as authorization to charge an advance fee if another applicable law prohibits it.
The Bond Obligation Extends Beyond Closing the Business
The current Texas Form 2802 provides that the Credit Services Organization bond must be maintained until two years after the date the CSO ceases operations.
The bond is continuous unless cancelled by the surety. Under the form, the surety must give the Texas Secretary of State written notice at least 60 days before cancellation.
Closing a CSO does not therefore mean the bond can necessarily be cancelled immediately.
How to Obtain a Texas CSO Surety Bond
Confirm Your Requirement
Determine whether your business is subject to Chapter 393 and whether the $10,000 security requirement applies.
Apply for the Bond
Open our surety platform and select the Credit Services Organization bond result.
Review the Bond
Make sure the business name and location shown on the bond match the information being submitted to the Secretary of State.
Submit Through SOSPortal
Complete the online CSO registration and upload the completed security documentation as required by the Texas Secretary of State.
Verify Your CSO Requirement
The Texas Secretary of State administers Credit Services Organization registration and security filings. If you are unsure whether your business falls within Chapter 393 or qualifies for an exemption, verify that question before purchasing a bond.
Texas Credit Services Organization Bond FAQs
How much is the Texas Credit Services Organization bond?
Does every Credit Services Organization need a bond?
Does a credit repair company count as a CSO?
Do I need a separate bond for every location?
What is Texas Form 2802?
Can I use a bank account instead of purchasing a bond?
How long does the CSO bond have to stay in effect?
Does buying a bond allow me to charge advance fees?
How much does the $10,000 bond cost?
Where do I file my CSO registration?
What happens when I click the bond application button?
Ready to Apply for Your $10,000 CSO Bond?
Confirm that the bond requirement applies to your business and location, then open our surety platform to begin the application process.
Bond approval and premium are subject to surety underwriting. Registration and security requirements are determined by applicable Texas law and the Texas Secretary of State.