Legislature approves consumer protection bill against lawsuit extortion calls

The Tennessee Commerce Committee convened on March 26, 2025, to discuss significant consumer protection legislation aimed at enhancing the regulation of debt resolution services. The meeting highlighted two key bills: one focused on consumer protection against extortion tactics, and the other aimed at modernizing the licensure and regulation of debt resolution providers.

The first bill introduced establishes a consumer protection violation for individuals who attempt to extort fees from citizens by falsely claiming involvement in lawsuits. This measure empowers the Attorney General to take action against such deceptive practices. The committee unanimously approved the bill, with a vote of 21 in favor and none opposed, signaling strong support for the initiative.

The second bill, House Bill 743, seeks to improve transparency and regulation within the debt resolution industry. It separates the oversight of debt resolution companies from credit counseling services, addressing challenges posed by their combined regulation under current law. This separation is expected to streamline regulatory processes and enhance consumer protection.

Key provisions of House Bill 743 include a requirement for debt resolution providers to obtain a license before offering services, with specific exemptions for bank employees, attorneys, and certified public accountants. The bill mandates that consumers only pay fees after a resolution has been reached with their creditors, ensuring that providers deliver services before collecting payment. Additionally, it requires consumers to deposit funds into FDIC-insured accounts dedicated to debt resolution, with clear service agreements outlining fees and the role of the provider.

The committee's discussions reflect a commitment to safeguarding consumer interests and improving the financial landscape in Tennessee. The bills will now proceed to the calendar and rules for further consideration.