Tennessee proposes rules to implement Debt Resolution Services Act, sets $4,000 license fee

Joseph Wharton, associate general counsel in the Tennessee Department of Commerce and Insurance, opened a Jan. 13 rulemaking hearing to solicit public comment on proposed regulations implementing the Debt Resolution Services Act and amending the state's debt management provider registration rules.

Wharton said the proposed chapter for the new Debt Resolution Services Program would “institute the registration and regulation of providers of debt resolution services and to protect the interest of consumers,” and that the proposal establishes a nonrefundable fee of $4,000 for an initial debt resolution service license and a $4,000 renewal fee. He also read provisions requiring applications on a form prescribed by the commissioner, signed under penalty of perjury, and including criminal-history checks and fingerprints as required by TCA section 47-18-5805(b).

Under the proposed rules, a license to provide debt resolution services would be valid for two years from issuance; applicants must notify the commissioner within 30 days of material changes to information submitted with their application. While a renewal application is pending, a licensee may continue to provide debt resolution services unless the commissioner suspends or denies the renewal. The rules would remove a prior requirement that renewal forms be notarized and would require sworn criminal-history attestations on initial applications.

The department also read amendments to the existing debt management provider registration program that mainly replace several position titles (for example, replacing the term “administrator” with “commissioner” and “director” with “assistant commissioner”), update definitions, and modernize recordkeeping and examination provisions.

Proposed standards of practice would require providers to inform potential Tennessee clients of their registration status at first contact, maintain records (signed consumer agreements kept five years after a consumer graduates or terminates), and comply with applicable federal and state laws. Providers would be prohibited from misleading advertising, enrolling clients in unaffordable plans without appropriate advisement, misrepresenting fees, and using logos or marks that imply government affiliation.

The rules also set enforcement mechanisms: the commissioner may suspend or revoke a license for violations of the act or rules, refusal to permit examinations of books and records, material misrepresentations, or failure to respond to commissioner communications. Civil penalties may be assessed “not to exceed $5,000 per violation up to a maximum of $100,000 plus cost of investigation,” and each day a violation occurs may be considered a separate offense.

The department said applications must include fingerprints transmitted electronically to the Tennessee Bureau of Investigation or FBI where the state contract permits; applicants are responsible for fingerprint-processing fees. If the state contract for electronic fingerprinting is unavailable, applicants must submit three classifiable TBI and FBI fingerprint cards and pay associated processing fees.

Wharton closed the hearing by outlining next procedural steps: the rules will be prepared for filing with the governor’s office, forwarded to the attorney general’s office for legality review, and, if approved, filed with the secretary of state; rules generally become effective 90 days after filing subject to the joint government operations committee process.

What happens next: the department will accept the hearing record and is required to provide written responses to comments for the rulemaking record before final action. Any applicant denied a license may appeal to the Chancery Court of Davidson County within 30 days of receiving the written denial.