HB 743

ON MARCH 31, 2025, THE HOUSE ADOPTED AMENDMENTS #1 AND #2 AND PASSED HOUSE BILL 743, AS AMENDED. AMENDMENT #1 writes this bill to enact the Debt Res olution Services Act, which generally requires licensure of debt resolution service providers in Tennessee. For purposes of this amendment, "debt resolution services"" means a program or service represented, directly or by implication, to negotiate, settl e, or in any way alter the terms of payment or other terms of the debt between a consumer and one or more unsecured creditors, including a reduction in the balance, interest rate, or fees owed by a consumer to an unsecured creditor. Providers of certain o f the services for which this amendment requires licensure are presently subject to regulation and registration under the Uniform Debt-Management Services Act, which applies to services as an intermediary between an individual and one (1) or more creditor s of the individual for the purpose of obtaining concessions. This amendment requires the commissioner of commerce and insurance to issue debt resolution service licenses to qualified applicants. The full text of this amendment specifies various qualific ations for licensure, some of which are income statements for the two years preceding the application, evidence of accreditation or certification by an independent accrediting or certifying organization approved by the commissioner or by a national trade g roup for debt resolution services providers to certify that regular audits have been completed to assure compliance with federal and state regulations and with industry best practices, and (if required by the commissioner) submitting fingerprints for the a pplicant's executive officers to be used for criminal history background checks. The following persons are exempt from all of this amendment's requirements: (1) A person organized under § 501(c) or § 501(q) of the Internal Revenue Code; (2) Judicial officers, including an individual acting under the direction of a court; (3) Banks and the employees of banks; (4) Attorneys licensed to practice law in this state who provide debt resolution services within an attorney-client relationship; (5) Cred itors or the employees of creditors who negotiate debt resolutions with consumers or with licensees acting on behalf of consumers; (6) Assignees for the benefit of creditors; (7) Government officers or employees who perform debt resolution services on behalf of the federal government, a state, a municipality, or a state agency, and who receive compensation solely from the governmental entity; (8) Licensed CPAs who provide debt resolution services within an accountant-client relationship; (9) Dedicat ed account service providers that do not otherwise provide debt resolution services for consumers; and (10) Persons, to the extent that the person provides or agrees to provide debt resolution services to an individual who the person has no reason to kno w resides in this state at the time the person agrees to provide the services. The following persons are exempt from the licensing requirements of this amendment: (1) A licensee's employees; and (2) A person who markets on behalf of a licensee and does not otherwise provide debt resolution services. A licensee under this amendment must: (1) File a surety bond with the state for up to $50, 000; (2) In connection with an application for license renewal, provide access to the licensee's books and records with respect to consumers in this state that are being or have been serviced by the licensee; (3) File an annual report with the commissioner, the contents of which are specified in the full text of this amendment; (4) Maintain a toll-free tel ecommunications system, staffed at a level that has adequate capacity to accept requests from the reasonably anticipated volume of consumers contacting the licensee during ordinary business hours; (5) Provide accounting statements to consumers with whom they have entered a service agreement; (6) Refrain from engaging in false or misleading advertising, as described in the full text of this amendment; and (7) Maintain records. This amendment authorizes the commissioner to participate in a multistate licensing system for the sharing of regulatory information and for the licensing and application, by electronic or other means, of entities engaged in the business of debt resolution services. The full text of this amendment specifies grounds for which the commissioner may deny, suspend, or revoke a license, and the procedure for such actions and appeals thereof. This amendment also authorizes the commissioner to receive complaints, exercise certain investigatory powers, refer cases to prosecutorial a u thorities, and take administrative enforcement action. If the commissioner finds that a person has violated a provision of this amendment, a rule adopted pursuant to this amendment, or any other law applicable to the conduct of a licensee, then the commi s sioner may order or impose a penalty upon the person, which must not exceed $5, 000 per violation, up to a maximum of $100, 000, plus costs of investigation. An action or proceeding brought by the commissioner under this part must be commenced within the f o ur years after the conduct that underlies the complaint is discovered by the commissioner or the harmed consumer the applicable statute of limitations for any applicable criminal offense. This amendment authorizes a licensee to request or require a consu mer, as a condition to the provision of debt resolution services, to establish and place funds into a dedicated account administered by a dedicated account services provider; provided, that: (1) The funds are held in a FDIC-insured bank; (2) The consu mer owns the funds held in the account, including all accrued interest on the account, if any; (3) The dedicated account service provider is not owned or controlled by, or affiliated with, the debt resolution services provider; (4) The dedicated accoun t service provider does not give or accept any money or other compensation in exchange for referrals of business involving the debt resolution services; (5) The consumer may terminate the debt resolution services at any time without penalty by giving not ice, and thereafter, the licensee shall notify the dedicated account services provider of the consumer's termination within five business days of receipt of the consumer's notice of intent to terminate debt resolution services; and (6) The agreement disc loses the criteria set forth in (1) - (5). This amendment requires that a licensee, at the time an agreement is executed by a consumer, or as shortly thereafter as practicable, distribute or otherwise make available to the consumer a copy of the executed agreement. The full text of this amendment specifies 14 disclosures that must be included in any such agreement. This amendment authorizes a licensee to extend credit to a consumer in the form of a deferral of some or all of the licensee's fee for resolving the consumer's debts, at no additional expense to the consumer. A licensee may assist in arranging credit to the consumer if the credit is extended to the consumer by or through a person that is either separately licensed or authorized to perfo r m lending in this state, or exempt from licensure. This amendment specifies that a consumer may terminate an agreement with a licensee at any time without penalty by notifying the licensee electronically, in writing, or telephonically on a recorded line. A licensee is entitled to recover all fees earned prior to the receipt of a termination notice. If a consumer fails to fulfill the consumer's contractual obligations on or before the sixth day after the consumer was required to fulfill the obligations, then the licensee may terminate its agreement with the consumer in writing, including electronically. If the licensee terminates the agreement in accordance with this section, then the consumer does not owe any further payment to the licensee as of the d a te the licensee terminates the agreement, other than for the fees previously earned by the licensee. This amendment establishes requirements for the fees that licensees can charge for debt resolution services. Very generally, fees must either: (1) Bear the same proportional relationship to the total fee for renegotiating, resolving, reducing, or altering the terms of the entire debt balance as the individual debt amount bears to the entire debt amount; or (2) Be a percentage of the amount saved as a result of the renegotiation, resolution, reduction, or alteration. The full text of this amendment specifies 13 acts that licensees and marketers for licensees are prohibited from engaging in. This amendment specifies that transactions for licensees whose licenses were issued pursuant to the Uniform Debt-Management Services Act that were entered into prior to January 1, 2026, and the rights, duties, and interests resulting from such transactions, may be completed, terminated, or enforced as required or permitted by a law amended, repealed, modified, or preempted by this amendment as though the amendment, repeal, modification, or preemption had not occurred. Licenses issued pursuant to the Uniform Debt-Management Services Act prior to January 1, 2026, and the rights, duties, and interests resulting from the issuance of such licenses, may be completed, terminated, or enforced as required or permitted by a law amended, repealed, modified, or preempted by this amendment as though the amendment, repeal, m o dification, or preemption had not occurred. Businesses offering services other than debt resolution services whose licenses were issued pursuant to Uniform Debt-Management Services Act may continue to operate under such license without transition to this part. This amendment takes effect July 1, 2025, for rulemaking purposes and January 1, 2026, for all other purposes. AMENDMENT #2 makes technical corrections to Amendment #1."