Consumer Leasing (Regulation M), 82934-82938 [2024-23276]
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Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations
xi. From January 1, 2024, through
December 31, 2024, the threshold amount is
$32,400.
xii. From January 1, 2025, through
December 31, 2025, the threshold amount is
$33,500.
4. Qualifying for exemption—in general. A
transaction is exempt under § 226.43(b)(2) 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
§ 226.43(b)(2) 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
§ 226.43(b)(2) 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 § 226.43 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
§ 226.43 applies. See § 226.43(b) and (d)(7).
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CONSUMER FINANCIAL PROTECTION
BUREAU
Authority and Issuance
For the reasons set forth in the
preamble, the CFPB amends Regulation
Z, 12 CFR part 1026, as set forth below:
PART 1026—TRUTH IN LENDING
(REGULATION Z)
5. The authority citation for part 1026
continues to read as follows:
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Authority: 12 U.S.C. 2601, 2603–2605,
2607, 2609, 2617, 3353, 5511, 5512, 5532,
5581; 15 U.S.C. 1601 et seq.
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.
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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 in the following 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.
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.
x. From January 1, 2023, through December
31, 2023, the threshold amount is $31,000.
xi. From January 1, 2024, through
December 31, 2024, the threshold amount is
$32,400.
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xii. From January 1, 2025, through
December 31, 2025, the threshold amount is
$33,500.
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.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning
and Strategy, Consumer Financial Protection
Bureau.
[FR Doc. 2024–23277 Filed 10–11–24; 8:45 am]
BILLING CODE 6210–01–P; 4810–33–P; 4810–AM–P
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R–1842]
RIN 7100–AG 83
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
(CFPB).
ACTION: Final rules and official
interpretations.
AGENCY:
The Board and the CFPB
(collectively, Agencies) are finalizing
amendments to the official
SUMMARY:
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Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations
interpretations 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).
Based on the annual percentage increase
in the CPI–W as of June 1, 2024, the
exemption threshold will increase from
$69,500 to $71,900 effective January 1,
2025. 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.
This final rule is effective
January 1, 2025.
DATES:
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
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.
CFPB: George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
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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
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)
(CFPB).
2 Public Law 111–203, sec. 1100E, 124 Stat. 1376,
2111 (2010).
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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,
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
CFPB, effective July 21, 2011. In
connection with this transfer of
rulemaking authority, the CFPB issued
its own Regulation M implementing the
CLA, 12 CFR part 1013, substantially
duplicating the Board’s Regulation M.5
Although the CFPB 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
The Agencies’ regulations,7 and their
accompanying official interpretations,
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
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
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) (CFPB).
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82935
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
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. 2025 Adjustment and Official
Interpretations Revision
Effective January 1, 2025, the
exemption threshold amount is
increased from $69,500 to $71,900. This
amount is based on the CPI–W in effect
on June 1, 2024, which was reported on
May 15, 2024 (based on April 2024
data).10 The CPI–W is a subset of the
8 See comments 2(e)–9 in supplement I of 12 CFR
parts 213 and 1013.
9 See 81 FR 86256 (Nov. 30, 2016).
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, 2024, were reported
on May 15, 2024, and reflect economic conditions
in April 2024.
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Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations
CPI–U index (based on all urban
consumers) and represents
approximately 30 percent of the U.S.
population. The CPI–W reported on
May 15, 2024, reflects a 3.4 percent
increase in the CPI–W from April 2023
to April 2024. Accordingly, the 3.4
percent increase in the CPI–W from
April 2023 to April 2024 results in an
exemption threshold amount of $71,900,
after rounding. The Agencies are
revising the official interpretations to
their respective regulations to add new
comment 2(e)–11.xvi to state that, from
January 1, 2025, through December 31,
2025, the threshold amount is $71,900.
These revisions are effective January 1,
2025.
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
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.
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Paperwork Reduction Act
The Agencies reviewed this final rule
in accordance with the Paperwork
Reduction Act of 1995.13 The Agencies
have determined that this rule does not
create any new information collections
or substantially revise any existing
collections.
CFPB Congressional Review Act
Statement
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the CFPB will
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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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)
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
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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 purchaseoption 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
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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. 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 in the following 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.
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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.
xvi. From January 1, 2025, through
December 31, 2025, the threshold amount is
$71,900.
*
*
*
*
*
CONSUMER FINANCIAL PROTECTION
BUREAU
Authority and Issuance
For the reasons set forth in the
preamble, the CFPB 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
*
*
*
*
*
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
PO 00000
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Fmt 4700
Sfmt 4700
82937
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 purchaseoption 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
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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)–1 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
VerDate Sep<11>2014
15:50 Oct 11, 2024
Jkt 265001
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 in the following 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.
xvi. From January 1, 2025, through
December 31, 2025, the threshold amount is
$71,900.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning
and Strategy, Consumer Financial Protection
Bureau.
[FR Doc. 2024–23276 Filed 10–11–24; 8:45 am]
BILLING CODE 6210–01–P; 4810–AM–P
PO 00000
Frm 00008
Fmt 4700
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FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1843]
RIN 7100–AG 84
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
(CFPB).
ACTION: Final rules, official
interpretations.
AGENCY:
The Board and the CFPB
(collectively, Agencies) are publishing
final rules amending the official
interpretations 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 adjusted annually
by the annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W).
Based on the annual percentage increase
in the CPI–W as of June 1, 2024, the
exemption threshold will increase from
$69,500 to $71,900 effective January 1,
2025. Because the Dodd-Frank Act also
requires similar adjustments in the
Consumer Leasing Act’s threshold for
exempt consumer leases, the Agencies
are making similar amendments to each
of their respective regulations
implementing the Consumer Leasing
Act elsewhere in the Rules section of
this issue of the Federal Register.
DATES: This final rule is effective
January 1, 2025.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
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.
CFPB: George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
E:\FR\FM\15OCR1.SGM
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]]>Agencies
- FEDERAL RESERVE SYSTEM
- CONSUMER FINANCIAL PROTECTION BUREAU
[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Rules and Regulations]
[Pages 82934-82938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23276]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R-1842]
RIN 7100-AG 83
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 (CFPB).
ACTION: Final rules and official interpretations.
-----------------------------------------------------------------------
SUMMARY: The Board and the CFPB (collectively, Agencies) are finalizing
amendments to the official
[[Page 82935]]
interpretations 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). Based on the
annual percentage increase in the CPI-W as of June 1, 2024, the
exemption threshold will increase from $69,500 to $71,900 effective
January 1, 2025. 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, 2025.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior Counsel, Division of Consumer and
Community Affairs, Board of Governors 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.
CFPB: George Karithanom, Regulatory Implementation & Guidance
Program Analyst, Office of Regulations, at 202-435-7700 or at: https://reginquiries.consumerfinance.gov/. 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, 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) (CFPB).
\2\ Public Law 111-203, sec. 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
CFPB, effective July 21, 2011. In connection with this transfer of
rulemaking authority, the CFPB issued its own Regulation M implementing
the CLA, 12 CFR part 1013, substantially duplicating the Board's
Regulation M.\5\ Although the CFPB 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 official
interpretations, 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) (CFPB).
\8\ See comments 2(e)-9 in supplement 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. 2025 Adjustment and Official Interpretations Revision
Effective January 1, 2025, the exemption threshold amount is
increased from $69,500 to $71,900. This amount is based on the CPI-W in
effect on June 1, 2024, which was reported on May 15, 2024 (based on
April 2024 data).\10\ The CPI-W is a subset of the
[[Page 82936]]
CPI-U index (based on all urban consumers) and represents approximately
30 percent of the U.S. population. The CPI-W reported on May 15, 2024,
reflects a 3.4 percent increase in the CPI-W from April 2023 to April
2024. Accordingly, the 3.4 percent increase in the CPI-W from April
2023 to April 2024 results in an exemption threshold amount of $71,900,
after rounding. The Agencies are revising the official interpretations
to their respective regulations to add new comment 2(e)-11.xvi to state
that, from January 1, 2025, through December 31, 2025, the threshold
amount is $71,900. These revisions are effective January 1, 2025.
---------------------------------------------------------------------------
\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, 2024, were reported on May 15, 2024, and
reflect economic conditions in April 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 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 Agencies reviewed this final rule in accordance with the
Paperwork Reduction Act of 1995.\13\ 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.
---------------------------------------------------------------------------
CFPB Congressional Review Act Statement
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the CFPB 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
[[Page 82937]]
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.
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 in
the following 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.
xvi. From January 1, 2025, through December 31, 2025, the
threshold amount is $71,900.
* * * * *
CONSUMER FINANCIAL PROTECTION BUREAU
Authority and Issuance
For the reasons set forth in the preamble, the CFPB 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.
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
[[Page 82938]]
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)-1 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 in
the following 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.
xvi. From January 1, 2025, through December 31, 2025, the
threshold amount is $71,900.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning and Strategy, Consumer
Financial Protection Bureau.
[FR Doc. 2024-23276 Filed 10-11-24; 8:45 am]
BILLING CODE 6210-01-P; 4810-AM-P
