Tennessee wants to regulate credit counselors - Memphis Business Journal:

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The Uniform Debt Management Services Act caps fees and require such companies to carry insurance and asurethy bond. It also includes other regulations. It also such companiese doing business with Tennessee residents to registee withthe state. Many debt management firms are based inother states, with many in Texas, but operate by phonre and online. They markeft to Tennesseans through ads such as roadside Debt management companies actas go-betweenzs with consumers and their debtors, and work to help negotiater down consumer debt.
The act was drafted with the help of the UniformLaw Commission, a state-supported organization that focuses on consumed protection and is tryinb to create a set standarsd nationwide. The commission says the firms generallg charge significant upfront fees and advise their customerw to stop paying their They are directed to save up a lump sum of generally 40 percent to 60 percent oftheir debt, that the companhy then uses to negotiate a settlementg with the creditor. ln many cases, consumers can negotiate a settlemen directly with their credirt card companies but may be too intimidate d todo so. Sen.
Doug Overbey, R-Maryville, who sponsored the Senate bill, says the new law “giveds us an opportunity to get out frontr and protect consumersbefore there’s a problen in our state.” The Tennessee bill is similar to legislatiohn already enacted in Colorado, Delaware and Rhode and being introduced this year in Connecticut, Minnesota, New Mexico, Texas and Washington. The ULC is pushinb similar legislation in several statesdthis year. Tennessee lawmakers have made afew modifications, includinf requiring companies to pay a fee to the which will make it a self-sustaining as well as submit two yearxs of verified financial statements.