MYTH – There are 20 states that require a commercial collection agency to be licensed and/or bonded in that respective state in order to conduct collection activity and/or the solicitation of clients.  It is critical that prior to engaging a collection agency you make sure they are properly licensed in the state where your customer resides.  Additionally, in certain states, the agency must also be licensed to solicit your business and represent your interests. If your agency is not properly licensed in the state where both you and your customer reside, it could cause legal issues for you as the company that hired said agency. See our section above on “contract” as some less reputable agencies will insert unfair language into their contract that legally binds you to a cancellation fee even if the agency has no prospect for payment