Consumer Leasing (Regulation M), 83318-83322 [2023-25049]
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Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations
assets,’’ 5 (2) incorporating the statutory
dividend rates for Reserve Bank
stockholders 6 and (3) providing that the
Board shall adjust the threshold for total
consolidated assets annually to reflect
the change in the Gross Domestic
Product Price Index.7 The Board has
explained that it ‘‘expects to make this
adjustment [to the threshold for total
consolidated assets] using the final
second quarter estimate of the Gross
Domestic Product Price Index for each
year, published by the Bureau of
Economic Analysis.’’ 8
II. Adjustment
The Board annually adjusts the $10
billion total consolidated asset
threshold based on the change in the
Gross Domestic Product Price Index
between the second quarter of 2015 (the
baseline year) and the second quarter of
the current year.9 The second quarter
2023 Gross Domestic Product Price
Index estimate published by the BEA in
September 2023 (121.789) is 25.17
percent higher than the second quarter
2015 Gross Domestic Product Price
Index estimate published by the BEA in
September 2023 (97.302). Based on this
change in the Gross Domestic Product
Price Index, the threshold for total
consolidated assets in Regulation I will
be $12,517,000,000 as of January 1,
2024.
III. Administrative Law Matters
Administrative Procedure Act
CFR 209.1(d)(3).
CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii);
209.2(a); and 209.3(d)(5).
7 12 CFR 209.4(f).
8 81 FR 84415, 84417 (Nov. 23, 2016).
9 The BEA makes ongoing revisions to its
estimates of the Gross Domestic Product Price Index
for historical calendar quarters. The Board
calculates annual adjustments from the baseline
year (rather than from the prior-year total
consolidated asset threshold) to ensure that the
adjusted total consolidated asset threshold
accurately reflects the cumulative change in the
BEA’s most recent estimates of the Gross Domestic
Product Price Index.
10 See 12 CFR 209.4(f) and n. 8 and accompanying
text, supra.
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FEDERAL RESERVE SYSTEM
The Regulatory Flexibility Act (RFA)
does not apply to a rulemaking where a
general notice of proposed rulemaking
is not required.11 As noted previously,
the Board has determined that it is
unnecessary to publish a general notice
of proposed rulemaking for this final
rule. Accordingly, the RFA’s
requirements relating to an initial and
final regulatory flexibility analysis do
not apply.
12 CFR Part 213
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,12 the Board has
reviewed this final rule. No collections
of information pursuant to the
Paperwork Reduction Act are contained
in the final rule.
List of Subjects in 12 CFR Part 209
Banks and banking, Federal Reserve
System, Reporting and recordkeeping
requirements, Securities.
Authority and Issuance
For the reasons set forth in the
preamble, the Board amends Regulation
I, 12 CFR part 209, as follows:
PART 209—ISSUE AND
CANCELLATION OF FEDERAL
RESERVE BANK CAPITAL STOCK
(REGULATION I)
1. The authority citation for part 209
continues to read as follows:
■
The provisions of 5 U.S.C. 553(b)
relating to notice of proposed
rulemaking have not been followed in
connection with the adoption of these
amendments. The amendments involve
expected, ministerial adjustments that
are required by statute and Regulation I
and are consistent with a method
previously set forth by the Board.10
Accordingly, the Board finds good cause
for determining, and so determines, that
notice in accordance with 5 U.S.C.
553(b) is unnecessary.
5 12
Regulatory Flexibility Act
Authority: 12 U.S.C. 12 U.S.C. 222, 248,
282, 286–288, 289, 321, 323, 327–328, and
466.
2. In part 209, remove all references to
‘‘$12,124,000,000’’ and add in their
place wherever they appear
‘‘$12,517,000,000’’.
■
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2023–26213 Filed 11–28–23; 8:45 am]
BILLING CODE 6210–01–P
11 5
U.S.C. 603 and 604.
U.S.C. 3506; 5 CFR part 1320.
12 44
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[Docket No. R–1821]
RIN 7100–AG70
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part 1013
Consumer Leasing (Regulation M)
Board of Governors of the
Federal Reserve System (Board) and
Consumer Financial Protection Bureau
(Bureau).
ACTION: Final rules, official
interpretations, and commentary.
AGENCY:
The Board and the Bureau
(collectively, the Agencies) 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
Agencies, if there is no annual
percentage increase in the CPI–W, the
Agencies will not adjust this exemption
threshold from the prior year.
Additionally, in years following a year
in which the exemption threshold was
not adjusted because the CPI–W
decreased, 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, 2023, the exemption threshold
will increase from $66,400 to $69,500
effective January 1, 2024. Because the
Dodd-Frank Act also requires similar
adjustments in the Truth in Lending
Act’s threshold for exempt consumer
credit transactions, the Agencies 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, 2024.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
SUMMARY:
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Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations
of the Federal Reserve System, at (202)
452–3667. For users of TTY–TRS, please
call 711 from any telephone, anywhere
in the United States.
Bureau: Anna Boadwee and Adrien
Fernandez, Attorney-Advisors, Office of
Regulations, Consumer Financial
Protection Bureau, at (202) 435–7700. If
you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
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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.3 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).4
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.5
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.6
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 Id.
4 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
4, 2011).
5 See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323
(Apr. 28, 2016).
6 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
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The Agencies’ regulations,7 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 $900.8 Since 2011,
the Agencies have adjusted the
Regulation M exemption threshold
annually, in accordance with these
rules.
On November 30, 2016, the Agencies
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).9 The
Regulation M Adjustment Calculation
Rule memorialized the policy that, if
there is no annual percentage increase
in the CPI–W, the Agencies 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
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 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).
7 12 CFR 213.2(e)(1) (Board) and 12 CFR
1013.2(e)(1) (Bureau).
8 See comments 2(e)–9 in Supplements I of 12
CFR parts 213 and 1013.
9 See 81 FR 86256 (Nov. 30, 2016).
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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.
II. 2024 Adjustment and Commentary
Revision
Effective January 1, 2024, the
exemption threshold amount is
increased from $66,400 to $69,500. This
amount is based on the CPI–W in effect
on June 1, 2023, which was reported on
May 10, 2023 (based on April 2023
data).10 The CPI–W is a subset of the
CPI–U index (based on all urban
consumers) and represents
approximately 30 percent of the U.S.
population. The CPI–W reported on
May 10, 2023, reflects a 4.6 percent
increase in the CPI–W from April 2022
to April 2023. Accordingly, the 4.6
percent increase in the CPI–W from
April 2022 to April 2023 results in an
exemption threshold amount of $69,500,
after rounding. The Agencies are
revising the commentaries to their
respective regulations to add new
comment 2(e)–11.xv to state that, from
January 1, 2024, through December 31,
2024, the threshold amount is $69,500.
These revisions are effective January 1,
2024.
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure
Act, notice and opportunity for public
comment are not required if the
Agencies find that notice and public
comment are impracticable,
unnecessary, or contrary to the public
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 Agencies have determined
10 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, 2023, were reported
on May 10, 2023, and reflect economic conditions
in April 2023.
11 5 U.S.C. 553(b)(B).
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Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations
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
The information collections contained
in Regulation Z which implements TILA
are approved by OMB under Control
number 3170–0006. The current
approval for this control number expires
on October 31, 2025. In accordance with
the Paperwork Reduction Act of 1995,13
the Agencies reviewed this final rule.
The Agencies have determined that this
rule does not create any new
information collections or substantially
revise any existing collections.
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 has
designated this rule as not a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
List of Subjects
12 CFR Part 213
Advertising, Consumer leasing,
Consumer protection, Federal Reserve
System, Reporting and recordkeeping
requirements.
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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:
12 5
U.S.C. 603(a) and 604(a).
U.S.C. 3506; 5 CFR part 1320.
13 44
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PART 213—CONSUMER LEASING
(REGULATION M)
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.
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
*
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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
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
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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
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.
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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
§ 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.
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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.
xiv. From January 1, 2023, through
December 31, 2023, the threshold
amount is $66,400.
xv. From January 1, 2024, through
December 31, 2024, the threshold
amount is $69,500.
*
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CONSUMER FINANCIAL
PROTECTION BUREAU
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:
■
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
or for nominal consideration, the owner
of the property upon compliance with
the agreement.
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83322
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations
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
amount for the upcoming year after the
annual percentage change in the CPI–W
that was in effect on June 1 becomes
VerDate Sep<11>2014
16:24 Nov 28, 2023
Jkt 262001
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.
vi. From January 1, 2015, through
December 31, 2015, the threshold
amount is $54,600.
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
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.
xiv. From January 1, 2023, through
December 31, 2023, the threshold
amount is $66,400.
xv. From January 1, 2024, through
December 31, 2024, the threshold
amount is $69,500.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
Brian Shearer,
Senior Advisor, Consumer Financial
Protection Bureau.
[FR Doc. 2023–25049 Filed 11–28–23; 8:45 am]
BILLING CODE 4810–AM–P; 6210–01–P
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1820]
RIN 7100–AG69
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part 1026
Truth in Lending (Regulation Z)
Board of Governors of the
Federal Reserve System (Board) and
Consumer Financial Protection Bureau
(Bureau).
ACTION: Final rules, official
interpretations, and commentary.
AGENCY:
The Board and the Bureau
(collectively, the Agencies) 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
SUMMARY:
E:\FR\FM\29NOR1.SGM
29NOR1
]]>Agencies
- FEDERAL RESERVE SYSTEM
- CONSUMER FINANCIAL PROTECTION BUREAU
[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Rules and Regulations]
[Pages 83318-83322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25049]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R-1821]
RIN 7100-AG70
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1013
Consumer Leasing (Regulation M)
AGENCY: Board of Governors of the Federal Reserve System (Board) and
Consumer Financial Protection Bureau (Bureau).
ACTION: Final rules, official interpretations, and commentary.
-----------------------------------------------------------------------
SUMMARY: The Board and the Bureau (collectively, the Agencies) 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
Agencies, if there is no annual percentage increase in the CPI-W, the
Agencies will not adjust this exemption threshold from the prior year.
Additionally, in years following a year in which the exemption
threshold was not adjusted because the CPI-W decreased, 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, 2023, the exemption threshold will increase from $66,400 to
$69,500 effective January 1, 2024. Because the Dodd-Frank Act also
requires similar adjustments in the Truth in Lending Act's threshold
for exempt consumer credit transactions, the Agencies 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, 2024.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior Counsel, Division of Consumer and
Community Affairs, Board of Governors
[[Page 83319]]
of the Federal Reserve System, at (202) 452-3667. For users of TTY-TRS,
please call 711 from any telephone, anywhere in the United States.
Bureau: Anna Boadwee and Adrien Fernandez, Attorney-Advisors,
Office of Regulations, Consumer Financial Protection Bureau, 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.\3\ 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).\4\
---------------------------------------------------------------------------
\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\ Id.
\4\ 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.\5\ 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.\6\
---------------------------------------------------------------------------
\5\ See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323 (Apr. 28,
2016).
\6\ 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 Agencies' regulations,\7\ 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.\8\ Since 2011, the Agencies have adjusted the
Regulation M exemption threshold annually, in accordance with these
rules.
---------------------------------------------------------------------------
\7\ 12 CFR 213.2(e)(1) (Board) and 12 CFR 1013.2(e)(1) (Bureau).
\8\ See comments 2(e)-9 in Supplements I of 12 CFR parts 213 and
1013.
---------------------------------------------------------------------------
On November 30, 2016, the Agencies 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).\9\ The Regulation M Adjustment
Calculation Rule memorialized the policy that, if there is no annual
percentage increase in the CPI-W, the Agencies 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.
---------------------------------------------------------------------------
\9\ See 81 FR 86256 (Nov. 30, 2016).
---------------------------------------------------------------------------
II. 2024 Adjustment and Commentary Revision
Effective January 1, 2024, the exemption threshold amount is
increased from $66,400 to $69,500. This amount is based on the CPI-W in
effect on June 1, 2023, which was reported on May 10, 2023 (based on
April 2023 data).\10\ The CPI-W is a subset of the CPI-U index (based
on all urban consumers) and represents approximately 30 percent of the
U.S. population. The CPI-W reported on May 10, 2023, reflects a 4.6
percent increase in the CPI-W from April 2022 to April 2023.
Accordingly, the 4.6 percent increase in the CPI-W from April 2022 to
April 2023 results in an exemption threshold amount of $69,500, after
rounding. The Agencies are revising the commentaries to their
respective regulations to add new comment 2(e)-11.xv to state that,
from January 1, 2024, through December 31, 2024, the threshold amount
is $69,500. These revisions are effective January 1, 2024.
---------------------------------------------------------------------------
\10\ 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, 2023, were reported on May 10, 2023, and
reflect economic conditions in April 2023.
---------------------------------------------------------------------------
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the Agencies find that notice and
public comment are impracticable, unnecessary, or contrary to the
public 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 Agencies have determined
[[Page 83320]]
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
The information collections contained in Regulation Z which
implements TILA are approved by OMB under Control number 3170-0006. The
current approval for this control number expires on October 31, 2025.
In accordance with the Paperwork Reduction Act of 1995,\13\ the
Agencies reviewed this final rule. The Agencies have determined that
this rule does not create any new information collections or
substantially revise any existing collections.
---------------------------------------------------------------------------
\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 has designated
this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2).
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 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.
[[Page 83321]]
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.
xiv. From January 1, 2023, through December 31, 2023, the threshold
amount is $66,400.
xv. From January 1, 2024, through December 31, 2024, the threshold
amount is $69,500.
* * * * *
CONSUMER FINANCIAL PROTECTION BUREAU
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 or for nominal consideration, the owner of the property
upon compliance with the agreement.
[[Page 83322]]
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.
xiv. From January 1, 2023, through December 31, 2023, the threshold
amount is $66,400.
xv. From January 1, 2024, through December 31, 2024, the threshold
amount is $69,500.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
Brian Shearer,
Senior Advisor, Consumer Financial Protection Bureau.
[FR Doc. 2023-25049 Filed 11-28-23; 8:45 am]
BILLING CODE 4810-AM-P; 6210-01-P
