Agencies Issue Final Rule on Method to Adjust Thresholds for Exempting Certain Consumer Credit and Lease Transactions and Announce 2017 Thresholds
Washington, D.C. – The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) today issued a final rule detailing the method that will be used to adjust the thresholds for exempting certain consumer credit and lease transactions from the Truth in Lending Act and Consumer Leasing Act.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires that the exemption thresholds in the Truth in Lending Act and the Consumer Leasing Act be adjusted annually based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The calculation method adopted in the final rule will allow the thresholds to keep pace with the CPI-W. Among other clarifications, the final rule details that if there is no annual percentage increase in the CPI-W, the agencies will not adjust the exemption thresholds from the prior year.
The final rule also applies the calculation method to the thresholds for exempt credit and lease transactions for 2017. The thresholds will remain at $54,600 based on the CPI-W in effect on June 1, 2016.
The protections of the Truth in Lending Act and the Consumer Leasing Act generally apply to consumer credit transactions and consumer leases at or below the thresholds. However, private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan.
The Dodd-Frank Act generally transferred rulemaking authority under the Truth in Lending Act and the Consumer Leasing Act to the CFPB. However, the Federal Reserve Board retains authority to issue rules for certain motor vehicle dealers. Therefore, the agencies are issuing these notices jointly.
The notices have been published in the Federal Register: Regulation M | Regulation Z
Sam Gilford, CFPB
Susan Stawick, Federal Reserve Board
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.