Banks and Financial Institutions - As enacted, authorizes a premium finance company to impose and collect a convenience fee from an insured for use of certain payment methods; authorizes a premium finance company to char, the official text

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PUBLIC CHAPTER NO. 258

       SENATE BILL NO. 766
                By Bailey

Substituted for: House Bill No. 772
By Powers, Hale, Darby, Vaughan

AN ACT to amend Tennessee Code Annotated, Title 56, Chapter 37, relative to premium finance
          companies.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

          SECTION 1. Tennessee Code Annotated, Section 56-37-109, is amended by deleting
subdivision (4) and substituting:

(4)(A) A licensee may also impose and collect a convenience fee from any insured
paying by credit card, debit card, electronic funds transfer, electronic check, or other
electronic means in order to offset actual costs incurred by a licensee in accepting and
processing payments made by electronic means.

(B)(i) A convenience fee collected by a licensee pursuant to this subdivision (4)
must not exceed the actual costs incurred by the licensee; provided, that, a
licensee may impose a convenience fee in lieu of the actual cost of the
individual payment type that does not exceed the average of the actual cost
incurred for the various types of electronic payments for which the licensee
imposes a convenience fee.

(ii)(a) As used in subdivision (4)(B)(i}, "actual cost" means actual third-
party costs incurred for the processing of payments made by electronic
means.

          (b) For purposes of determining actual costs as defined in
subdivision (4)(B)(ii)(a), if a licensee is a subsidiary of an entity that
processes payments made by electronic means, then the costs incurred
by the licensee's parent entity are third-party costs.

(C) A licensee charging a convenience fee pursuant to this subdivision (4) shall

notify the insured of the amount of the fee prior to completing a transaction, provide an

opportunity for the insured to cancel the transaction without incurring a fee, and make

available the option to make a payment on a loan by check, cash, or money order

directly to the licensee without the imposition of a convenience fee for a card payment

or electronic payment.             •

          (D) When an insured elects to make a payment to the licensee by credit card,
debit card, electronic funds transfer, electronic check, or other electronic means and a
convenience fee is imposed and collected pursuant to this subdivision (4), the payment
of the convenience fee is not refundable.

          (E) The convenience fee described in this subdivision (4) may be charged in
addition to all other interest and fees allowed by law.

          (F) A licensee shall not charge a convenience fee on any debit card or prepaid
card transaction if the payment card network on which the transaction is initiated or
proces,sed prohibits such conveniencefee by contract, rule, or policy.
SB 766
                   (5) Licensees may also charge and collect from the insured, through regular billing

         procedure or otherwise, a handling charge pursuant to § 47-29-102 for a draft, check,
         electronic funds transfer, electronic check, card payment, or any other electronic payment,
         negotiable order of withdrawal, or like instrument drawn on a bank or other depository
         institution given by any person in full or partial repayment of a loan or other extension of
         credit if the instrument is not paid or dishonored by the institution; provided, that a licensee:

                             (A) May redeposit the instrument with the institution or return the dishonored
                   instrument to the insured or person to whom the credit was extended upon
                   redemption of the instrument; and

                             (B) Shall not collect more than one (1) handling charge on any one (1) check
                   or electronic debit authorization.
                   (6) The charges referred to in this section must not be considered directly or indirectly
          in determining whether a violation of usury laws has occurred under a premium finance
         agreement.
          SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.

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         SENATE BILL NO. 766

PASSED:  April 14, 2025

                     ,<.~~

                                                 RANDY MJNALLY
                                    SPEAKER OF THE ~ENA TE

                             CAMERON SEXTON, SPEAKER
                             HOUSE OF REPRESENTATIVES

~Lf{t APPROVED this  day of  April  2025

             ~

         BILL LEE, GOVERNOR