Consumer Protection

AN ACT to amend Tennessee Code Annotated, Title 45 and Title 47, Chapter 18, relative to online payment systems.

Labor

Did Not Pass

The latest official action shows that this bill did not move forward in that session.

Sponsor: Fritts, Yager
Last action: 2025-03-19
Official status: Failed in s/c Banking and Consumer Affairs Subcommittee of Commerce Committee
Effective date: Not listed

Plain English Breakdown

The bill did not pass and is no longer being considered.

Online Payment System Protection

This bill prohibits online payment system operators from freezing user funds without providing written notice.

What This Bill Does

Requires online payment system operators to notify users before freezing their funds.
Specifies that the notification must be given within 30 days if there's a suspicion of fraud or financial exploitation.
Defines an online payment system as one that helps transfer money over the internet, but excludes banks and credit unions.

Who It Names or Affects

Users of online payment systems
Operators of online payment systems

Terms To Know

Online Payment System: A system that helps transfer money over the internet, but does not include banks or credit unions.
Financial Exploitation: When someone takes advantage of another person's financial situation for personal gain.

Limits and Unknowns

The bill did not pass and is no longer being considered.
It applies only to contracts or agreements made on or after July 1, 2025.

Bill History

2025-03-25 Tennessee General Assembly
Assigned to General Subcommittee of Senate Commerce and Labor Committee
2025-03-19 Tennessee General Assembly
Failed in s/c Banking and Consumer Affairs Subcommittee of Commerce Committee
2025-03-19 Tennessee General Assembly
Placed on Senate Commerce and Labor Committee calendar for 3/25/2025
2025-03-18 Tennessee General Assembly
Action deferred in Senate Commerce and Labor Committee to 3/25/2025
2025-03-13 Tennessee General Assembly
Placed on Senate Commerce and Labor Committee calendar for 3/18/2025
2025-03-12 Tennessee General Assembly
Placed on s/c cal Banking & Consumer Affairs Subcommittee for 3/19/2025
2025-03-11 Tennessee General Assembly
Placed on Senate Commerce and Labor Committee calendar for 3/18/2025
2025-02-20 Tennessee General Assembly
Sponsor(s) Added.
2025-02-12 Tennessee General Assembly
Passed on Second Consideration, refer to Senate Commerce and Labor Committee
2025-02-11 Tennessee General Assembly
Assigned to s/c Banking & Consumer Affairs Subcommittee
2025-02-10 Tennessee General Assembly
P2C, ref. to Commerce Committee
2025-02-10 Tennessee General Assembly
Introduced, Passed on First Consideration
2025-02-06 Tennessee General Assembly
Intro., P1C.
2025-02-06 Tennessee General Assembly
Filed for introduction
2025-02-05 Tennessee General Assembly
Filed for introduction

Official Summary Text

For contracts or agreements entered into, amended, or renewed on or after July 1, 2025, this bill generally prohibits an
operator of an online payment system from freezing the funds of a user without first providing the affected user with written notice of the online payment system's intent to freeze the user's funds. The operator must provide the notice to all users invol
v
ed in an affected transaction, including the user attempting to send money and the user who is the intended recipient of the money.

If an operator of an online payment system has a reasonable belief that financial exploitation may have occurred, may have
been attempted, or is being attempted, or that fraud or a violation of another law or regulation has occurred or is occurring, then this bill requires the operator of the online payment system to provide notice as described above within 30 days of freezi
n
g the funds. Notice so given must be limited or otherwise provided in a manner that complies with federal regulations, if applicable.

This bill provides that a violation of this bill by an online payment system constitutes an unfair or deceptive act pro
hibited under the "Tennessee Consumer Protection Act of 1977," and is punishable as provided in that act.

Current Bill Text

Read the full stored bill text

SENATE BILL 1125
By Yager

HOUSE BILL 1011
By Fritts

HB1011
002425
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 45
and Title 47, Chapter 18, relative to online
payment systems.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 47, Chapter 18, Part 1, is amended by
adding the following as a new section:
47-18-136.
(a) As used in this section:
(1) "Online payment system":
(A) Means an online or mobile system that facilitates the
exchange of currency through the internet, including a money transfer or
payment; and
(B) Does not include an online or mobile system provided by:
(i) A state or national bank;
(ii) A state or federal savings and loan association; or
(iii) A state or federal credit union; and
(2) "User":
(A) Means an individual or entity utilizing an online payment
system; and
(B) Includes an individual or entity that:
(i) Has or does not have an account with the online
payment system; and

- 2 - 002425

(ii) Uses the online payment system to send money,
receive money, or both.
(b) Except as provided in subsection (c), an operator of an online payment
system shall not freeze the funds of a user without first providing the affected user with
written notice of the online payment system's intent to freeze the user's funds. The
operator shall provide the notice required by this subsection (b) to all users involved in
an affected transaction, including the user attempting to send money and the user who is
the intended recipient of the money.
(c) If an operator of an online payment system has a reasonable belief that
financial exploitation, as defined in § 45-2-1202, may have occurred, may have been
attempted, or is being attempted, or that fraud or a violation of another law or regulation
has occurred or is occurring, then the operator of the online payment system shall
provide notice as described in subsection (b) within thirty (30) days of freezing the funds.
Notice given pursuant to this subsection (c) must be limited or otherwise provided in a
manner that complies with 31 CFR 1022.320 and 31 U.S.C. § 5318, if applicable.
(d) A violation of this section by an online payment system constitutes an unfair
or deceptive act prohibited under § 47-18-104, and is punishable as provided in this part.
SECTION 2. Tennessee Code Annotated, Section 47-18-104(b), is amended by adding
the following as a new subdivision:
( ) A violation of § 47-18-136;
SECTION 3. This act takes effect July 1, 2025, the public welfare requiring it, and
applies to contracts or agreements entered into, amended, or renewed on or after that date.