Consumer Leasing (Regulation M), 67847-67851 [2021-25909]
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Federal Register / Vol. 86, No. 227 / Tuesday, November 30, 2021 / Rules and Regulations
6. In Supplement I to part 1026, under
Section 1026.35—Requirements for
Higher-Priced Mortgage Loans,
paragraph 35(c)(2)(ii) is revised to read
as follows:
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Supplement I to Part 1026—Official
Interpretations
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Section 1026.35—Requirements for HigherPriced Mortgage Loans
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Paragraph 35(c)(2)(ii)
1. Threshold amount. For purposes of
§ 1026.35(c)(2)(ii), the threshold amount in
effect during a particular period is the
amount stated in comment 35(c)(2)(ii)–3 for
that period. The threshold amount is
adjusted effective January 1 of each year by
any annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W) that
was in effect on the preceding June 1.
Comment 35(c)(2)(ii)–3 will be amended to
provide the threshold amount for the
upcoming year after the annual percentage
change in the CPI–W that was in effect on
June 1 becomes available. Any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if the
annual percentage increase in the CPI–W
would result in a $950 increase in the
threshold amount, the threshold amount will
be increased by $1,000. However, if the
annual percentage increase in the CPI–W
would result in a $949 increase in the
threshold amount, the threshold amount will
be increased by $900.
2. No increase in the CPI–W. If the CPI–W
in effect on June 1 does not increase from the
CPI–W in effect on June 1 of the previous
year, the threshold amount effective the
following January 1 through December 31
will not change from the previous year.
When this occurs, for the years that follow,
the threshold is calculated based on the
annual percentage change in the CPI–W
applied to the dollar amount that would have
resulted, after rounding, if decreases and any
subsequent increases in the CPI–W had been
taken into account.
i. Net increases. If the resulting amount
calculated, after rounding, is greater than the
current threshold, then the threshold
effective January 1 the following year will
increase accordingly.
ii. Net decreases. If the resulting amount
calculated, after rounding, is equal to or less
than the current threshold, then the
threshold effective January 1 the following
year will not change, but future increases
will be calculated based on the amount that
would have resulted.
3. Threshold. For purposes of
§ 1026.35(c)(2)(ii), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. From January 18, 2014, through
December 31, 2014, the threshold amount is
$25,000.
ii. From January 1, 2015, through
December 31, 2015, the threshold amount is
$25,500.
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iii. From January 1, 2016, through
December 31, 2016, the threshold amount is
$25,500.
iv. From January 1, 2017, through
December 31, 2017, the threshold amount is
$25,500.
v. From January 1, 2018, through December
31, 2018, the threshold amount is $26,000.
vi. From January 1, 2019, through
December 31, 2019, the threshold amount is
$26,700.
vii. From January 1, 2020, through
December 31, 2020, the threshold amount is
$27,200.
viii. From January 1, 2021, through
December 31, 2021, the threshold amount is
$27,200.
ix. From January 1, 2022, through
December 31, 2022, the threshold amount is
$28,500.
4. Qualifying for exemption—in general. A
transaction is exempt under
§ 1026.35(c)(2)(ii) if the creditor makes an
extension of credit at consummation that is
equal to or below the threshold amount in
effect at the time of consummation.
5. Qualifying for exemption—subsequent
changes. A transaction does not meet the
condition for an exemption under
§ 1026.35(c)(2)(ii) merely because it is used to
satisfy and replace an existing exempt loan,
unless the amount of the new extension of
credit is equal to or less than the applicable
threshold amount. For example, assume a
closed-end loan that qualified for a
§ 1026.35(c)(2)(ii) exemption at
consummation in year one is refinanced in
year ten and that the new loan amount is
greater than the threshold amount in effect in
year ten. In these circumstances, the creditor
must comply with all of the applicable
requirements of § 1026.35(c) with respect to
the year ten transaction if the original loan
is satisfied and replaced by the new loan,
unless another exemption from the
requirements of § 1026.35(c) applies. See
§ 1026.35(c)(2) and (c)(4)(vii).
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Michael J. Hsu,
Acting Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Ann Misback,
Secretary of the Board.
Laura Galban,
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2021–25908 Filed 11–29–21; 8:45 am]
BILLING CODE 4810–33–P 6210–01–P 4810–AM–P
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FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R–1756]
RIN 7100–AG19
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1013
Consumer Leasing (Regulation M)
Board of Governors of the
Federal Reserve System (Board) and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Final rules, official
interpretations and commentary.
AGENCY:
The Board and the Bureau are
finalizing amendments to the official
interpretations and commentary for the
agencies’ regulations that implement the
Consumer Leasing Act (CLA). The
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank
Act) amended the CLA by requiring that
the dollar threshold for exempt
consumer leases be adjusted annually
by the annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W).
Under regulations adopted by the Board
and the Bureau, if there is no annual
percentage increase in the CPI–W, the
Board and the Bureau will not adjust
this exemption threshold from the prior
year. However, in years following a year
in which the exemption threshold was
not adjusted, the threshold is calculated
by applying the annual percentage
change in the CPI–W to the dollar
amount that would have resulted, after
rounding, if the decreases and any
subsequent increases in the CPI–W had
been taken into account. Based on the
annual percentage increase in the CPI–
W as of June 1, 2021, the exemption
threshold will increase from $58,300 to
$61,000 effective January 1, 2022.
Because the Dodd-Frank Act also
requires similar adjustments in the
Truth in Lending Act’s threshold for
exempt consumer credit transactions,
the Board and the Bureau are making
similar amendments to each of their
respective regulations implementing the
Truth in Lending Act elsewhere in the
Rules section of this issue of the Federal
Register.
DATES: This final rule is effective
January 1, 2022.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
SUMMARY:
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of the Federal Reserve System, at (202)
452–3667.
Bureau: Lanique Eubanks, Senior
Counsel, Office of Regulations, Bureau
of Consumer Financial Protection, at
(202) 435–7700. If you require this
document in an alternative electronic
format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act increased the
threshold in the CLA for exempt
consumer leases, and the threshold in
the Truth in Lending Act (TILA) for
exempt consumer credit transactions,1
from $25,000 to $50,000, effective July
21, 2011.2 In addition, the Dodd-Frank
Act requires that, on and after December
31, 2011, these thresholds be adjusted
annually for inflation by the annual
percentage increase in the CPI–W, as
published by the Bureau of Labor
Statistics. In April 2011, the Board
issued a final rule amending Regulation
M (which implements the CLA)
consistent with these provisions of the
Dodd-Frank Act, along with a similar
final rule amending Regulation Z
(which implements TILA) (collectively,
the Board Final Threshold Rules).3
Title X of the Dodd-Frank Act
transferred rulemaking authority for a
number of consumer financial
protection laws from the Board to the
Bureau, effective July 21, 2011. In
connection with this transfer of
rulemaking authority, the Bureau issued
its own Regulation M implementing the
CLA, 12 CFR part 1013, substantially
duplicating the Board’s Regulation M.4
Although the Bureau has the authority
to issue rules to implement the CLA for
most entities, the Board retains
authority to issue rules under the CLA
for certain motor vehicle dealers
covered by section 1029(a) of the DoddFrank Act, and the Board’s Regulation
M continues to apply to those entities.5
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1 Although
consumer credit transactions above
the threshold are generally exempt, loans secured
by real property or by personal property used or
expected to be used as the principal dwelling of a
consumer and private education loans are covered
by TILA regardless of the loan amount. See 12 CFR
226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i)
(Bureau).
2 Public Law 111–203, section 1100E, 124 Stat.
1376, 2111 (2010).
3 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
4, 2011).
4 See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323
(Apr. 28, 2016).
5 Section 1029(a) of the Dodd-Frank Act states:
‘‘Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking, supervisory,
enforcement, or any other authority . . . over a
motor vehicle dealer that is predominantly engaged
in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.’’
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The Board’s and the Bureau’s
regulations,6 and their accompanying
commentaries, provide that the
exemption threshold will be adjusted
annually effective January 1 of each year
based on any annual percentage
increase in the CPI–W that was in effect
on the preceding June 1. They further
provide that any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if
the annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900.7 Since 2011, the
Board and the Bureau have adjusted the
Regulation M exemption threshold
annually, in accordance with these
rules.
On November 30, 2016, the Board and
the Bureau published a final rule in the
Federal Register to memorialize the
calculation method used by the agencies
each year to adjust the exemption
threshold to ensure that, as
contemplated by section 1100E(b) of the
Dodd-Frank Act, the values for the
exemption threshold keep pace with the
CPI–W (Regulation M Adjustment
Calculation Rule).8 The Regulation M
Adjustment Calculation Rule
memorialized the policy that, if there is
no annual percentage increase in the
CPI–W, the Board and the Bureau will
not adjust the exemption threshold from
the prior year. The Regulation M
Adjustment Calculation Rule also
provided that, in years following a year
in which the exemption threshold was
not adjusted because there was a
decrease in the CPI–W from the
previous year, the threshold is
calculated by applying the annual
percentage change in the CPI–W to the
dollar amount that would have resulted,
after rounding, if the decreases and any
subsequent increases in the CPI–W had
been taken into account. If the resulting
amount calculated, after rounding, is
greater than the current threshold, then
the threshold effective January 1 the
following year will increase
accordingly; if the resulting amount
calculated, after rounding, is equal to or
less than the current threshold, then the
threshold effective January 1 the
following year will not change, but
future increases will be calculated based
on the amount that would have resulted,
after rounding.
12 U.S.C. 5519(a). Section 1029(b) of the DoddFrank Act provides that ‘‘[s]ubsection (a) shall not
apply to any person, to the extent that such
person—(1) provides consumers with any services
related to residential or commercial mortgages or
self-financing transactions involving real property;
(2) operates a line of business—(A) that involves the
extension of retail credit or retail leases involving
motor vehicles; and (B) in which—(i) the extension
of retail credit or retail leases are provided directly
to consumers; and (ii) the contract governing such
extension of retail credit or retail leases is not
routinely assigned to an unaffiliated third party
finance or leasing source; or (3) offers or provides
a consumer financial product or service not
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or
any related or ancillary product or service.’’ 12
U.S.C. 5519(b).
6 12 CFR 213.2(e)(1) (Board) and 12 CFR
1013.2(e)(1) (Bureau).
7 See comments 2(e)–9 in Supplements I of 12
CFR parts 213 and 1013.
8 See 81 FR 86256 (Nov. 30, 2016).
Administrative Procedure Act
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II. 2022 Adjustment and Commentary
Revision
Effective January 1, 2022, the
exemption threshold amount is
increased from $58,300 to $61,000. This
amount is based on the CPI–W in effect
on June 1, 2021, which was reported on
May 12, 2021 (based on April 2021
data).9 The CPI–W is a subset of the
CPI–U index (based on all urban
consumers) and represents
approximately 29 percent of the U.S.
population. The CPI–W reported on
May 12, 2021 reflects a 4.7 percent
increase in the CPI–W from April 2020
to April 2021. Accordingly, the 4.7
percent increase in the CPI–W from
April 2020 to April 2021 results in an
exemption threshold amount of $61,000,
after rounding. The Board and the
Bureau are revising the commentaries to
their respective regulations to add new
comment 2(e)–11.xiii to state that, from
January 1, 2022 through December 31,
2022, the threshold amount is $61,000.
These revisions are effective January 1,
2022.10
III. Regulatory Analysis
Under the Administrative Procedure
Act, notice and opportunity for public
comment are not required if the Board
and the Bureau find that notice and
public comment are impracticable,
unnecessary, or contrary to the public
9 The Bureau of Labor Statistics calculates
consumer-based indices for each month, but does
not report those indices until the middle of the
following month. As such, the most recently
reported indices as of June 1, 2021 were reported
on May 12, 2021, and reflect economic conditions
in April 2021.
10 The agencies note that to add new comment
2(e)–11.xiii to their respective rules, Supplement I
to part 213, section 213.2 paragraph 2(e) (Board)
and Supplement I to part 1013, section 1013.2,
paragraph 2(e) (Bureau) are being republished in
their entirety to comply with the Federal Register’s
publication requirement.
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interest.11 The amendments in this rule
are technical and apply the method
previously set forth in the Board Final
Threshold Rules and the Regulation M
Adjustment Calculation Rule. For these
reasons, the Board and the Bureau have
determined that publishing a notice of
proposed rulemaking and providing
opportunity for public comment are
unnecessary. Therefore, the
amendments are adopted in final form.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
does not apply to a rulemaking where a
general notice of proposed rulemaking
is not required.12 As noted previously,
the agencies have determined that it is
unnecessary to publish a general notice
of proposed rulemaking for this joint
final rule. Accordingly, the RFA’s
requirements relating to an initial and
final regulatory flexibility analysis do
not apply.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,13 the agencies
reviewed this final rule. No collections
of information pursuant to the
Paperwork Reduction Act are contained
in the final rule.
Bureau Congressional Review Act
Statement
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Bureau
will submit a report containing this rule
and other required information to the
U.S. Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to the
rule taking effect. The Office of
Information and Regulatory Affairs
(OIRA) has designated this rule as not
a ‘‘major rule’’ as defined by 5 U.S.C.
804(2).
Bureau Signing Authority
The Associate Director of Research,
Markets, and Regulations, Janis K.
Pappalardo, having reviewed and
approved this document, is delegating
the authority to electronically sign this
document to Laura Galban, Bureau
Federal Register Liaison, for purposes of
publication in the Federal Register.
List of Subjects
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12 CFR Part 213
Advertising, Consumer leasing,
Consumer protection, Federal Reserve
System, Reporting and recordkeeping
requirements.
11 5
U.S.C. 553(b)(B).
U.S.C. 603(a) and 604(a).
13 44 U.S.C. 3506; 5 CFR part 1320.
12 5
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12 CFR Part 1013
Administrative practice and
procedure, Advertising, Consumer
protection, Reporting and recordkeeping
requirements, Truth in lending.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
Authority and Issuance
For the reasons set forth in the
preamble, the Board amends Regulation
M, 12 CFR part 213, as set forth below:
PART 213—CONSUMER LEASING
(REGULATION M)
1. The authority citation for part 213
continues to read as follows:
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Authority: 15 U.S.C. 1604 and 1667f; Pub.
L. 111–203 section 1100E, 124 Stat. 1376.
2. In Supplement I to Part 213, under
Section 213.2—Definitions, revise 2(e)
Consumer Lease, as follows:
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Supplement I to Part 213—Official Staff
Interpretations
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Section 213.2—Definitions
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2(e) Consumer Lease. 1. Primary
purposes. A lessor must determine in
each case if the leased property will be
used primarily for personal, family, or
household purposes. If a question exists
as to the primary purpose for a lease, the
fact that a lessor gives disclosures is not
controlling on the question of whether
the transaction is covered. The primary
purpose of a lease is determined before
or at consummation and a lessor need
not provide Regulation M disclosures
where there is a subsequent change in
the primary use.
2. Period of time. To be a consumer
lease, the initial term of the lease must
be more than four months. Thus, a lease
of personal property for four months,
three months or on a month-to-month or
week-to-week basis (even though the
lease actually extends beyond four
months) is not a consumer lease and is
not subject to the disclosure
requirements of the regulation.
However, a lease that imposes a penalty
for not continuing the lease beyond four
months is considered to have a term of
more than four months. To illustrate:
i. A three-month lease extended on a
month-to-month basis and terminated
after one year is not subject to the
regulation.
ii. A month-to-month lease with a
penalty, such as the forfeiture of a
security deposit for terminating before
one year, is subject to the regulation.
3. Total contractual obligation. The
total contractual obligation is not
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necessarily the same as the total of
payments disclosed under § 213.4(e).
The total contractual obligation includes
nonrefundable amounts a lessee is
contractually obligated to pay to the
lessor, but excludes items such as:
i. Residual value amounts or
purchase-option prices;
ii. Amounts collected by the lessor
but paid to a third party, such as taxes,
licenses, and registration fees.
4. Credit sale. The regulation does not
cover a lease that meets the definition
of a credit sale in Regulation Z, 12 CFR
226.2(a)(16), which is defined, in part,
as a bailment or lease (unless terminable
without penalty at any time by the
consumer) under which the consumer:
i. Agrees to pay as compensation for
use a sum substantially equivalent to, or
in excess of, the total value of the
property and services involved; and
ii. Will become (or has the option to
become), for no additional consideration
or for nominal consideration, the owner
of the property upon compliance with
the agreement.
5. Agricultural purpose. Agricultural
purpose means a purpose related to the
production, harvest, exhibition,
marketing, transportation, processing, or
manufacture of agricultural products by
a natural person who cultivates, plants,
propagates, or nurtures those
agricultural products, including but not
limited to the acquisition of personal
property and services used primarily in
farming. Agricultural products include
horticultural, viticultural, and dairy
products, livestock, wildlife, poultry,
bees, forest products, fish and shellfish,
and any products thereof, including
processed and manufactured products,
and any and all products raised or
produced on farms and any processed or
manufactured products thereof.
6. Organization or other entity. A
consumer lease does not include a lease
made to an organization such as a
corporation or a government agency or
instrumentality. Such a lease is not
covered by the regulation even if the
leased property is used (by an
employee, for example) primarily for
personal, family or household purposes,
or is guaranteed by or subsequently
assigned to a natural person.
7. Leases of personal property
incidental to a service. The following
leases of personal property are deemed
incidental to a service and thus are not
subject to the regulation:
i. Home entertainment systems
requiring the consumer to lease
equipment that enables a television to
receive the transmitted programming.
ii. Security alarm systems requiring
the installation of leased equipment
intended to monitor unlawful entries
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into a home and in some cases to
provide fire protection.
iii. Propane gas service where the
consumer must lease a propane tank to
receive the service.
8. Safe deposit boxes. The lease of a
safe deposit box is not a consumer lease
under § 213.2(e).
9. Threshold amount. A consumer
lease is exempt from the requirements of
this part if the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation.
The threshold amount in effect during a
particular time period is the amount
stated in comment 2(e)–11 for that
period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 2(e)–11 will
be amended to provide the threshold
amount for the upcoming year after the
annual percentage change in the
CPI–W that was in effect on June 1
becomes available. Any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if
the annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900. If a consumer lease
is exempt from the requirements of this
part because the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation,
the lease remains exempt regardless of
a subsequent increase in the threshold
amount.
10. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, is
greater than the current threshold, then
the threshold effective January 1 the
following year will increase
accordingly.
ii. Net decreases. If the resulting
amount calculated, after rounding, is
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equal to or less than the current
threshold, then the threshold effective
January 1 the following year will not
change, but future increases will be
calculated based on the amount that
would have resulted.
11. Threshold. For purposes of
§ 213.2(e)(1), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011 through
December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through
December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through
December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through
December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through
December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through
December 31, 2017, the threshold
amount is $54,600.
ix. From January 1, 2018 through
December 31, 2018, the threshold
amount is $55,800.
x. From January 1, 2019 through
December 31, 2019, the threshold
amount is $57,200.
xi. From January 1, 2020 through
December 31, 2020, the threshold
amount is $58,300.
xii. From January 1, 2021 through
December 31, 2021, the threshold
amount is $58,300.
xiii. From January 1, 2022 through
December 31, 2022, the threshold
amount is $61,000.
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BUREAU OF CONSUMER FINANCIAL
PROTECTION
Authority and Issuance
For the reasons set forth in the
preamble, the Bureau amends
Regulation M, 12 CFR part 1013, as set
forth below:
PART 1013—CONSUMER LEASING
(REGULATION M)
3. The authority citation for part 1013
continues to read as follows:
■
Authority: 15 U.S.C. 1604 and 1667f; Pub.
L. 111–203 sec. 1100E, 124 Stat. 1376.
4. In Supplement I to part 1013, under
Section 1013.2—Definitions, revise
2(e)—Consumer Lease to read as
follows:
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Supplement I to Part 1013—Official
Interpretations
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Section 1013.2—Definitions
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2(e) Consumer Lease 1. Primary
purposes. A lessor must determine in
each case if the leased property will be
used primarily for personal, family, or
household purposes. If a question exists
as to the primary purpose for a lease, the
fact that a lessor gives disclosures is not
controlling on the question of whether
the transaction is covered. The primary
purpose of a lease is determined before
or at consummation and a lessor need
not provide Regulation M disclosures
where there is a subsequent change in
the primary use.
2. Period of time. To be a consumer
lease, the initial term of the lease must
be more than four months. Thus, a lease
of personal property for four months,
three months or on a month-to-month or
week-to-week basis (even though the
lease actually extends beyond four
months) is not a consumer lease and is
not subject to the disclosure
requirements of the regulation.
However, a lease that imposes a penalty
for not continuing the lease beyond four
months is considered to have a term of
more than four months. To illustrate:
i. A three-month lease extended on a
month-to-month basis and terminated
after one year is not subject to the
regulation.
ii. A month-to-month lease with a
penalty, such as the forfeiture of a
security deposit for terminating before
one year, is subject to the regulation.
3. Total contractual obligation. The
total contractual obligation is not
necessarily the same as the total of
payments disclosed under § 1013.4(e).
The total contractual obligation includes
nonrefundable amounts a lessee is
contractually obligated to pay to the
lessor, but excludes items such as:
i. Residual value amounts or
purchase-option prices;
ii. Amounts collected by the lessor
but paid to a third party, such as taxes,
licenses, and registration fees.
4. Credit sale. The regulation does not
cover a lease that meets the definition
of a credit sale in Regulation Z, 12 CFR
226.2(a)(16), which is defined, in part,
as a bailment or lease (unless terminable
without penalty at any time by the
consumer) under which the consumer:
i. Agrees to pay as compensation for
use a sum substantially equivalent to, or
in excess of, the total value of the
property and services involved; and
ii. Will become (or has the option to
become), for no additional consideration
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Federal Register / Vol. 86, No. 227 / Tuesday, November 30, 2021 / Rules and Regulations
or for nominal consideration, the owner
of the property upon compliance with
the agreement.
5. Agricultural purpose. Agricultural
purpose means a purpose related to the
production, harvest, exhibition,
marketing, transportation, processing, or
manufacture of agricultural products by
a natural person who cultivates, plants,
propagates, or nurtures those
agricultural products, including but not
limited to the acquisition of personal
property and services used primarily in
farming. Agricultural products include
horticultural, viticultural, and dairy
products, livestock, wildlife, poultry,
bees, forest products, fish and shellfish,
and any products thereof, including
processed and manufactured products,
and any and all products raised or
produced on farms and any processed or
manufactured products thereof.
6. Organization or other entity. A
consumer lease does not include a lease
made to an organization such as a
corporation or a government agency or
instrumentality. Such a lease is not
covered by the regulation even if the
leased property is used (by an
employee, for example) primarily for
personal, family or household purposes,
or is guaranteed by or subsequently
assigned to a natural person.
7. Leases of personal property
incidental to a service. The following
leases of personal property are deemed
incidental to a service and thus are not
subject to the regulation:
i. Home entertainment systems
requiring the consumer to lease
equipment that enables a television to
receive the transmitted programming.
ii. Security alarm systems requiring
the installation of leased equipment
intended to monitor unlawful entries
into a home and in some cases to
provide fire protection.
iii. Propane gas service where the
consumer must lease a propane tank to
receive the service.
8. Safe deposit boxes. The lease of a
safe deposit box is not a consumer lease
under § 1013.2(e).
9. Threshold amount. A consumer
lease is exempt from the requirements of
this part if the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation.
The threshold amount in effect during a
particular time period is the amount
stated in comment 2(e)–11 for that
period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 2(e)–11 will
be amended to provide the threshold
VerDate Sep<11>2014
15:56 Nov 29, 2021
Jkt 256001
amount for the upcoming year after the
annual percentage change in the CPI–W
that was in effect on June 1 becomes
available. Any increase in the threshold
amount will be rounded to the nearest
$100 increment. For example, if the
annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900. If a consumer lease
is exempt from the requirements of this
part because the total contractual
obligation exceeds the threshold amount
in effect at the time of consummation,
the lease remains exempt regardless of
a subsequent increase in the threshold
amount.
10. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, is
greater than the current threshold, then
the threshold effective January 1 the
following year will increase
accordingly.
ii. Net decreases. If the resulting
amount calculated, after rounding, is
equal to or less than the current
threshold, then the threshold effective
January 1 the following year will not
change, but future increases will be
calculated based on the amount that
would have resulted.
11. Threshold. For purposes of
§ 1013.2(e)(1), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011 through
December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through
December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through
December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through
December 31, 2014, the threshold
amount is $53,500.
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
67851
vi. From January 1, 2015 through
December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through
December 31, 2017, the threshold
amount is $54,600.
ix. From January 1, 2018 through
December 31, 2018, the threshold
amount is $55,800.
x. From January 1, 2019 through
December 31, 2019, the threshold
amount is $57,200.
xi. From January 1, 2020 through
December 31, 2020, the threshold
amount is $58,300.
xii. From January 1, 2021 through
December 31, 2021, the threshold
amount is $58,300.
xiii. From January 1, 2022 through
December 31, 2022, the threshold
amount is $61,000.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Ann Misback,
Secretary of the Board.
Laura Galban,
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2021–25909 Filed 11–29–21; 8:45 am]
BILLING CODE 6210–01–P; 4810–25–P
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1757]
RIN 7100–AG20
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
Truth in Lending (Regulation Z)
Board of Governors of the
Federal Reserve System (Board) and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Final rules, official
interpretations and commentary.
AGENCY:
The Board and the Bureau are
publishing final rules amending the
official interpretations and commentary
for the agencies’ regulations that
implement the Truth in Lending Act
(TILA). The Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) amended TILA by
requiring that the dollar threshold for
exempt consumer credit transactions be
SUMMARY:
E:\FR\FM\30NOR1.SGM
30NOR1
]]>Agencies
[Federal Register Volume 86, Number 227 (Tuesday, November 30, 2021)]
[Rules and Regulations]
[Pages 67847-67851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25909]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R-1756]
RIN 7100-AG19
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1013
Consumer Leasing (Regulation M)
AGENCY: Board of Governors of the Federal Reserve System (Board) and
Bureau of Consumer Financial Protection (Bureau).
ACTION: Final rules, official interpretations and commentary.
-----------------------------------------------------------------------
SUMMARY: The Board and the Bureau are finalizing amendments to the
official interpretations and commentary for the agencies' regulations
that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the
CLA by requiring that the dollar threshold for exempt consumer leases
be adjusted annually by the annual percentage increase in the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Under
regulations adopted by the Board and the Bureau, if there is no annual
percentage increase in the CPI-W, the Board and the Bureau will not
adjust this exemption threshold from the prior year. However, in years
following a year in which the exemption threshold was not adjusted, the
threshold is calculated by applying the annual percentage change in the
CPI-W to the dollar amount that would have resulted, after rounding, if
the decreases and any subsequent increases in the CPI-W had been taken
into account. Based on the annual percentage increase in the CPI-W as
of June 1, 2021, the exemption threshold will increase from $58,300 to
$61,000 effective January 1, 2022. Because the Dodd-Frank Act also
requires similar adjustments in the Truth in Lending Act's threshold
for exempt consumer credit transactions, the Board and the Bureau are
making similar amendments to each of their respective regulations
implementing the Truth in Lending Act elsewhere in the Rules section of
this issue of the Federal Register.
DATES: This final rule is effective January 1, 2022.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior Counsel, Division of Consumer and
Community Affairs, Board of Governors
[[Page 67848]]
of the Federal Reserve System, at (202) 452-3667.
Bureau: Lanique Eubanks, Senior Counsel, Office of Regulations,
Bureau of Consumer Financial Protection, at (202) 435-7700. If you
require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Act increased the threshold in the CLA for exempt
consumer leases, and the threshold in the Truth in Lending Act (TILA)
for exempt consumer credit transactions,\1\ from $25,000 to $50,000,
effective July 21, 2011.\2\ In addition, the Dodd-Frank Act requires
that, on and after December 31, 2011, these thresholds be adjusted
annually for inflation by the annual percentage increase in the CPI-W,
as published by the Bureau of Labor Statistics. In April 2011, the
Board issued a final rule amending Regulation M (which implements the
CLA) consistent with these provisions of the Dodd-Frank Act, along with
a similar final rule amending Regulation Z (which implements TILA)
(collectively, the Board Final Threshold Rules).\3\
---------------------------------------------------------------------------
\1\ Although consumer credit transactions above the threshold
are generally exempt, loans secured by real property or by personal
property used or expected to be used as the principal dwelling of a
consumer and private education loans are covered by TILA regardless
of the loan amount. See 12 CFR 226.3(b)(1)(i) (Board) and 12 CFR
1026.3(b)(1)(i) (Bureau).
\2\ Public Law 111-203, section 1100E, 124 Stat. 1376, 2111
(2010).
\3\ 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011).
---------------------------------------------------------------------------
Title X of the Dodd-Frank Act transferred rulemaking authority for
a number of consumer financial protection laws from the Board to the
Bureau, effective July 21, 2011. In connection with this transfer of
rulemaking authority, the Bureau issued its own Regulation M
implementing the CLA, 12 CFR part 1013, substantially duplicating the
Board's Regulation M.\4\ Although the Bureau has the authority to issue
rules to implement the CLA for most entities, the Board retains
authority to issue rules under the CLA for certain motor vehicle
dealers covered by section 1029(a) of the Dodd-Frank Act, and the
Board's Regulation M continues to apply to those entities.\5\
---------------------------------------------------------------------------
\4\ See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323 (Apr. 28,
2016).
\5\ Section 1029(a) of the Dodd-Frank Act states: ``Except as
permitted in subsection (b), the Bureau may not exercise any
rulemaking, supervisory, enforcement, or any other authority . . .
over a motor vehicle dealer that is predominantly engaged in the
sale and servicing of motor vehicles, the leasing and servicing of
motor vehicles, or both.'' 12 U.S.C. 5519(a). Section 1029(b) of the
Dodd-Frank Act provides that ``[s]ubsection (a) shall not apply to
any person, to the extent that such person--(1) provides consumers
with any services related to residential or commercial mortgages or
self-financing transactions involving real property; (2) operates a
line of business--(A) that involves the extension of retail credit
or retail leases involving motor vehicles; and (B) in which--(i) the
extension of retail credit or retail leases are provided directly to
consumers; and (ii) the contract governing such extension of retail
credit or retail leases is not routinely assigned to an unaffiliated
third party finance or leasing source; or (3) offers or provides a
consumer financial product or service not involving or related to
the sale, financing, leasing, rental, repair, refurbishment,
maintenance, or other servicing of motor vehicles, motor vehicle
parts, or any related or ancillary product or service.'' 12 U.S.C.
5519(b).
---------------------------------------------------------------------------
The Board's and the Bureau's regulations,\6\ and their accompanying
commentaries, provide that the exemption threshold will be adjusted
annually effective January 1 of each year based on any annual
percentage increase in the CPI-W that was in effect on the preceding
June 1. They further provide that any increase in the threshold amount
will be rounded to the nearest $100 increment. For example, if the
annual percentage increase in the CPI-W would result in a $950 increase
in the threshold amount, the threshold amount will be increased by
$1,000. However, if the annual percentage increase in the CPI-W would
result in a $949 increase in the threshold amount, the threshold amount
will be increased by $900.\7\ Since 2011, the Board and the Bureau have
adjusted the Regulation M exemption threshold annually, in accordance
with these rules.
---------------------------------------------------------------------------
\6\ 12 CFR 213.2(e)(1) (Board) and 12 CFR 1013.2(e)(1) (Bureau).
\7\ See comments 2(e)-9 in Supplements I of 12 CFR parts 213 and
1013.
---------------------------------------------------------------------------
On November 30, 2016, the Board and the Bureau published a final
rule in the Federal Register to memorialize the calculation method used
by the agencies each year to adjust the exemption threshold to ensure
that, as contemplated by section 1100E(b) of the Dodd-Frank Act, the
values for the exemption threshold keep pace with the CPI-W (Regulation
M Adjustment Calculation Rule).\8\ The Regulation M Adjustment
Calculation Rule memorialized the policy that, if there is no annual
percentage increase in the CPI-W, the Board and the Bureau will not
adjust the exemption threshold from the prior year. The Regulation M
Adjustment Calculation Rule also provided that, in years following a
year in which the exemption threshold was not adjusted because there
was a decrease in the CPI-W from the previous year, the threshold is
calculated by applying the annual percentage change in the CPI-W to the
dollar amount that would have resulted, after rounding, if the
decreases and any subsequent increases in the CPI-W had been taken into
account. If the resulting amount calculated, after rounding, is greater
than the current threshold, then the threshold effective January 1 the
following year will increase accordingly; if the resulting amount
calculated, after rounding, is equal to or less than the current
threshold, then the threshold effective January 1 the following year
will not change, but future increases will be calculated based on the
amount that would have resulted, after rounding.
---------------------------------------------------------------------------
\8\ See 81 FR 86256 (Nov. 30, 2016).
---------------------------------------------------------------------------
II. 2022 Adjustment and Commentary Revision
Effective January 1, 2022, the exemption threshold amount is
increased from $58,300 to $61,000. This amount is based on the CPI-W in
effect on June 1, 2021, which was reported on May 12, 2021 (based on
April 2021 data).\9\ The CPI-W is a subset of the CPI-U index (based on
all urban consumers) and represents approximately 29 percent of the
U.S. population. The CPI-W reported on May 12, 2021 reflects a 4.7
percent increase in the CPI-W from April 2020 to April 2021.
Accordingly, the 4.7 percent increase in the CPI-W from April 2020 to
April 2021 results in an exemption threshold amount of $61,000, after
rounding. The Board and the Bureau are revising the commentaries to
their respective regulations to add new comment 2(e)-11.xiii to state
that, from January 1, 2022 through December 31, 2022, the threshold
amount is $61,000. These revisions are effective January 1, 2022.\10\
---------------------------------------------------------------------------
\9\ The Bureau of Labor Statistics calculates consumer-based
indices for each month, but does not report those indices until the
middle of the following month. As such, the most recently reported
indices as of June 1, 2021 were reported on May 12, 2021, and
reflect economic conditions in April 2021.
\10\ The agencies note that to add new comment 2(e)-11.xiii to
their respective rules, Supplement I to part 213, section 213.2
paragraph 2(e) (Board) and Supplement I to part 1013, section
1013.2, paragraph 2(e) (Bureau) are being republished in their
entirety to comply with the Federal Register's publication
requirement.
---------------------------------------------------------------------------
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the Board and the Bureau find that
notice and public comment are impracticable, unnecessary, or contrary
to the public
[[Page 67849]]
interest.\11\ The amendments in this rule are technical and apply the
method previously set forth in the Board Final Threshold Rules and the
Regulation M Adjustment Calculation Rule. For these reasons, the Board
and the Bureau have determined that publishing a notice of proposed
rulemaking and providing opportunity for public comment are
unnecessary. Therefore, the amendments are adopted in final form.
---------------------------------------------------------------------------
\11\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\12\ As
noted previously, the agencies have determined that it is unnecessary
to publish a general notice of proposed rulemaking for this joint final
rule. Accordingly, the RFA's requirements relating to an initial and
final regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------
\12\ 5 U.S.C. 603(a) and 604(a).
---------------------------------------------------------------------------
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\13\ the
agencies reviewed this final rule. No collections of information
pursuant to the Paperwork Reduction Act are contained in the final
rule.
---------------------------------------------------------------------------
\13\ 44 U.S.C. 3506; 5 CFR part 1320.
---------------------------------------------------------------------------
Bureau Congressional Review Act Statement
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Bureau will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to the rule taking
effect. The Office of Information and Regulatory Affairs (OIRA) has
designated this rule as not a ``major rule'' as defined by 5 U.S.C.
804(2).
Bureau Signing Authority
The Associate Director of Research, Markets, and Regulations, Janis
K. Pappalardo, having reviewed and approved this document, is
delegating the authority to electronically sign this document to Laura
Galban, Bureau Federal Register Liaison, for purposes of publication in
the Federal Register.
List of Subjects
12 CFR Part 213
Advertising, Consumer leasing, Consumer protection, Federal Reserve
System, Reporting and recordkeeping requirements.
12 CFR Part 1013
Administrative practice and procedure, Advertising, Consumer
protection, Reporting and recordkeeping requirements, Truth in lending.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Authority and Issuance
For the reasons set forth in the preamble, the Board amends
Regulation M, 12 CFR part 213, as set forth below:
PART 213--CONSUMER LEASING (REGULATION M)
0
1. The authority citation for part 213 continues to read as follows:
Authority: 15 U.S.C. 1604 and 1667f; Pub. L. 111-203 section
1100E, 124 Stat. 1376.
0
2. In Supplement I to Part 213, under Section 213.2--Definitions,
revise 2(e) Consumer Lease, as follows:
Supplement I to Part 213--Official Staff Interpretations
* * * * *
Section 213.2--Definitions
* * * * *
2(e) Consumer Lease. 1. Primary purposes. A lessor must determine
in each case if the leased property will be used primarily for
personal, family, or household purposes. If a question exists as to the
primary purpose for a lease, the fact that a lessor gives disclosures
is not controlling on the question of whether the transaction is
covered. The primary purpose of a lease is determined before or at
consummation and a lessor need not provide Regulation M disclosures
where there is a subsequent change in the primary use.
2. Period of time. To be a consumer lease, the initial term of the
lease must be more than four months. Thus, a lease of personal property
for four months, three months or on a month-to-month or week-to-week
basis (even though the lease actually extends beyond four months) is
not a consumer lease and is not subject to the disclosure requirements
of the regulation. However, a lease that imposes a penalty for not
continuing the lease beyond four months is considered to have a term of
more than four months. To illustrate:
i. A three-month lease extended on a month-to-month basis and
terminated after one year is not subject to the regulation.
ii. A month-to-month lease with a penalty, such as the forfeiture
of a security deposit for terminating before one year, is subject to
the regulation.
3. Total contractual obligation. The total contractual obligation
is not necessarily the same as the total of payments disclosed under
Sec. 213.4(e). The total contractual obligation includes nonrefundable
amounts a lessee is contractually obligated to pay to the lessor, but
excludes items such as:
i. Residual value amounts or purchase-option prices;
ii. Amounts collected by the lessor but paid to a third party, such
as taxes, licenses, and registration fees.
4. Credit sale. The regulation does not cover a lease that meets
the definition of a credit sale in Regulation Z, 12 CFR 226.2(a)(16),
which is defined, in part, as a bailment or lease (unless terminable
without penalty at any time by the consumer) under which the consumer:
i. Agrees to pay as compensation for use a sum substantially
equivalent to, or in excess of, the total value of the property and
services involved; and
ii. Will become (or has the option to become), for no additional
consideration or for nominal consideration, the owner of the property
upon compliance with the agreement.
5. Agricultural purpose. Agricultural purpose means a purpose
related to the production, harvest, exhibition, marketing,
transportation, processing, or manufacture of agricultural products by
a natural person who cultivates, plants, propagates, or nurtures those
agricultural products, including but not limited to the acquisition of
personal property and services used primarily in farming. Agricultural
products include horticultural, viticultural, and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and
shellfish, and any products thereof, including processed and
manufactured products, and any and all products raised or produced on
farms and any processed or manufactured products thereof.
6. Organization or other entity. A consumer lease does not include
a lease made to an organization such as a corporation or a government
agency or instrumentality. Such a lease is not covered by the
regulation even if the leased property is used (by an employee, for
example) primarily for personal, family or household purposes, or is
guaranteed by or subsequently assigned to a natural person.
7. Leases of personal property incidental to a service. The
following leases of personal property are deemed incidental to a
service and thus are not subject to the regulation:
i. Home entertainment systems requiring the consumer to lease
equipment that enables a television to receive the transmitted
programming.
ii. Security alarm systems requiring the installation of leased
equipment intended to monitor unlawful entries
[[Page 67850]]
into a home and in some cases to provide fire protection.
iii. Propane gas service where the consumer must lease a propane
tank to receive the service.
8. Safe deposit boxes. The lease of a safe deposit box is not a
consumer lease under Sec. 213.2(e).
9. Threshold amount. A consumer lease is exempt from the
requirements of this part if the total contractual obligation exceeds
the threshold amount in effect at the time of consummation. The
threshold amount in effect during a particular time period is the
amount stated in comment 2(e)-11 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 2(e)-11 will be amended to provide the threshold amount for the
upcoming year after the annual percentage change in the CPI-W that was
in effect on June 1 becomes available. Any increase in the threshold
amount will be rounded to the nearest $100 increment. For example, if
the annual percentage increase in the CPI-W would result in a $950
increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900. If a consumer lease is
exempt from the requirements of this part because the total contractual
obligation exceeds the threshold amount in effect at the time of
consummation, the lease remains exempt regardless of a subsequent
increase in the threshold amount.
10. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
11. Threshold. For purposes of Sec. 213.2(e)(1), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold
amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold
amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold
amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold
amount is $58,300.
xii. From January 1, 2021 through December 31, 2021, the threshold
amount is $58,300.
xiii. From January 1, 2022 through December 31, 2022, the threshold
amount is $61,000.
* * * * *
BUREAU OF CONSUMER FINANCIAL PROTECTION
Authority and Issuance
For the reasons set forth in the preamble, the Bureau amends
Regulation M, 12 CFR part 1013, as set forth below:
PART 1013--CONSUMER LEASING (REGULATION M)
0
3. The authority citation for part 1013 continues to read as follows:
Authority: 15 U.S.C. 1604 and 1667f; Pub. L. 111-203 sec.
1100E, 124 Stat. 1376.
0
4. In Supplement I to part 1013, under Section 1013.2--Definitions,
revise 2(e)--Consumer Lease to read as follows:
Supplement I to Part 1013--Official Interpretations
* * * * *
Section 1013.2--Definitions
* * * * *
2(e) Consumer Lease 1. Primary purposes. A lessor must determine in
each case if the leased property will be used primarily for personal,
family, or household purposes. If a question exists as to the primary
purpose for a lease, the fact that a lessor gives disclosures is not
controlling on the question of whether the transaction is covered. The
primary purpose of a lease is determined before or at consummation and
a lessor need not provide Regulation M disclosures where there is a
subsequent change in the primary use.
2. Period of time. To be a consumer lease, the initial term of the
lease must be more than four months. Thus, a lease of personal property
for four months, three months or on a month-to-month or week-to-week
basis (even though the lease actually extends beyond four months) is
not a consumer lease and is not subject to the disclosure requirements
of the regulation. However, a lease that imposes a penalty for not
continuing the lease beyond four months is considered to have a term of
more than four months. To illustrate:
i. A three-month lease extended on a month-to-month basis and
terminated after one year is not subject to the regulation.
ii. A month-to-month lease with a penalty, such as the forfeiture
of a security deposit for terminating before one year, is subject to
the regulation.
3. Total contractual obligation. The total contractual obligation
is not necessarily the same as the total of payments disclosed under
Sec. 1013.4(e). The total contractual obligation includes
nonrefundable amounts a lessee is contractually obligated to pay to the
lessor, but excludes items such as:
i. Residual value amounts or purchase-option prices;
ii. Amounts collected by the lessor but paid to a third party, such
as taxes, licenses, and registration fees.
4. Credit sale. The regulation does not cover a lease that meets
the definition of a credit sale in Regulation Z, 12 CFR 226.2(a)(16),
which is defined, in part, as a bailment or lease (unless terminable
without penalty at any time by the consumer) under which the consumer:
i. Agrees to pay as compensation for use a sum substantially
equivalent to, or in excess of, the total value of the property and
services involved; and
ii. Will become (or has the option to become), for no additional
consideration
[[Page 67851]]
or for nominal consideration, the owner of the property upon compliance
with the agreement.
5. Agricultural purpose. Agricultural purpose means a purpose
related to the production, harvest, exhibition, marketing,
transportation, processing, or manufacture of agricultural products by
a natural person who cultivates, plants, propagates, or nurtures those
agricultural products, including but not limited to the acquisition of
personal property and services used primarily in farming. Agricultural
products include horticultural, viticultural, and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and
shellfish, and any products thereof, including processed and
manufactured products, and any and all products raised or produced on
farms and any processed or manufactured products thereof.
6. Organization or other entity. A consumer lease does not include
a lease made to an organization such as a corporation or a government
agency or instrumentality. Such a lease is not covered by the
regulation even if the leased property is used (by an employee, for
example) primarily for personal, family or household purposes, or is
guaranteed by or subsequently assigned to a natural person.
7. Leases of personal property incidental to a service. The
following leases of personal property are deemed incidental to a
service and thus are not subject to the regulation:
i. Home entertainment systems requiring the consumer to lease
equipment that enables a television to receive the transmitted
programming.
ii. Security alarm systems requiring the installation of leased
equipment intended to monitor unlawful entries into a home and in some
cases to provide fire protection.
iii. Propane gas service where the consumer must lease a propane
tank to receive the service.
8. Safe deposit boxes. The lease of a safe deposit box is not a
consumer lease under Sec. 1013.2(e).
9. Threshold amount. A consumer lease is exempt from the
requirements of this part if the total contractual obligation exceeds
the threshold amount in effect at the time of consummation. The
threshold amount in effect during a particular time period is the
amount stated in comment 2(e)-11 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 2(e)-11 will be amended to provide the threshold amount for the
upcoming year after the annual percentage change in the CPI-W that was
in effect on June 1 becomes available. Any increase in the threshold
amount will be rounded to the nearest $100 increment. For example, if
the annual percentage increase in the CPI-W would result in a $950
increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900. If a consumer lease is
exempt from the requirements of this part because the total contractual
obligation exceeds the threshold amount in effect at the time of
consummation, the lease remains exempt regardless of a subsequent
increase in the threshold amount.
10. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
11. Threshold. For purposes of Sec. 1013.2(e)(1), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011 through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012 through December 31, 2012, the threshold
amount is $51,800.
iv. From January 1, 2013 through December 31, 2013, the threshold
amount is $53,000.
v. From January 1, 2014 through December 31, 2014, the threshold
amount is $53,500.
vi. From January 1, 2015 through December 31, 2015, the threshold
amount is $54,600.
vii. From January 1, 2016 through December 31, 2016, the threshold
amount is $54,600.
viii. From January 1, 2017 through December 31, 2017, the threshold
amount is $54,600.
ix. From January 1, 2018 through December 31, 2018, the threshold
amount is $55,800.
x. From January 1, 2019 through December 31, 2019, the threshold
amount is $57,200.
xi. From January 1, 2020 through December 31, 2020, the threshold
amount is $58,300.
xii. From January 1, 2021 through December 31, 2021, the threshold
amount is $58,300.
xiii. From January 1, 2022 through December 31, 2022, the threshold
amount is $61,000.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority.
Ann Misback,
Secretary of the Board.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2021-25909 Filed 11-29-21; 8:45 am]
BILLING CODE 6210-01-P; 4810-25-P
