Tennessee House Bill HB1011

Tennessee 2025-2026 Regular Session

• Introduced: 2/5/25
• Refer: 2/10/25
• Failed: 3/19/25

Caption

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

Summary

HB1011 creates new consumer-protection rules for online payment systems in Tennessee. It defines “online payment system” broadly to cover online and mobile services that move money over the internet, while excluding systems offered by banks, savings and loan associations, and credit unions. The bill generally prohibits an operator from freezing a user’s funds without first giving written notice to the affected users, including both the sender and the intended recipient in a transaction. The bill also creates a limited exception when the operator has a reasonable belief that financial exploitation, fraud, or another legal or regulatory violation may have occurred or is occurring. In those cases, the operator may freeze funds first, but must provide notice within 30 days, subject to federal reporting and confidentiality requirements. A violation of the new section is treated as an unfair or deceptive act under Tennessee consumer protection law, making it enforceable under the Tennessee Consumer Protection Act.

Impact

HB1011 would amend Title 47, Chapter 18 of the Tennessee Code by adding a new section regulating online payment platforms and by expressly listing violations of that section as unfair or deceptive acts under the Tennessee Consumer Protection Act. The bill would affect operators of non-bank online payment systems such as peer-to-peer payment apps and digital money transfer services, requiring notice before freezing funds except in specified fraud or exploitation situations. It would apply to contracts or agreements entered into, amended, or renewed on or after July 1, 2025.

Sentiment

The available legislative history suggests the bill faced skepticism in committee, as it failed in the House Banking and Consumer Affairs Subcommittee by a 2-4 vote. With no transcript available, there is no detailed record of debate, but the vote outcome indicates limited support at that stage. Overall, the bill appears to have been framed as a consumer-protection measure, but not one that secured enough backing to advance out of subcommittee.

Contention

The main point of contention appears to be the balance between consumer notice rights and the discretion of payment platforms to freeze funds quickly in suspected fraud or exploitation cases. Supporters likely viewed the bill as protecting users from sudden account freezes and ensuring transparency, while opponents may have been concerned about operational burdens, fraud-prevention flexibility, and compliance with federal anti-money-laundering and reporting rules. The exclusion of banks and credit unions also suggests the bill was targeted at fintech and peer-to-peer payment services, which may have been a focal point of debate.