Agencies Announce 2016 Consumer Credit, Lease Transaction Thresholds

On November 25, the Federal Reserve and the CFPB announced that the dollar thresholds in Regulation Z and Regulation M for exempt consumer credit and lease transactions will not change in 2016. Based on the annual percentage decrease in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2015, TILA and Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $54,600 or less beginning January 1, 2016 – the same thresholds that applied in 2015. Regardless of the loan amount, private education loans and loans secured by real property remain subject to TILA. The agencies published notices of thresholds in Regulation Z and Regulation M in the Federal Register on November 27, 2015.

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FTC Announces Settlement with Ohio Auto Dealers

On November 24, the FTC announced that two Ohio auto dealers agreed to settle FTC charges that they deceived consumers with misleading advertisements. Specifically, the FTC alleged that the auto dealers violated the FTC Act and the Consumer Leasing Act by failing to adequately disclose key terms regarding car lease offers, such as (i) the total payment amount due at signing; (ii) whether a security deposit was required; and (iii) credit score requirements. The proposed settlement order will remain in effect for 20 years and prohibits the defendants from advertising misleading lease or financing terms. The defendants are barred from advertising a payment amount, or that any initial payment is required, without disclosing the following: (i) that the transaction is a lease; (ii) the total amount due at consummation or delivery; (iii) the number of payments, their amounts, and timing; (iv) whether or not a security deposit is required; and (v) that consumers may need to pay an extra fee at the end of the lease based on the difference between the vehicle’s residual value and the value at the end of the lease. Finally, the proposed settlement also requires the defendants to “clearly and conspicuously disclose all qualifications or restrictions on a consumer’s ability to obtain the advertised terms.”

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FTC Announces Final Consent Orders Against Auto Dealers for Alleged Deceptive Advertising

On October 20, the FTC announced that, following a public comment period, it approved final consent orders against two Las Vegas auto dealers for allegedly engaging in deceptive advertising practices. In June, the FTC filed two administrative complaints against the auto dealers for (i) misrepresenting the purchase price or leasing offers of vehicles; and (ii) failing to disclose key information in its advertisements, including if a down payment was required at the time of purchase. The final consent orders were unanimously approved in a 5-0 vote by the Commission and prohibit the dealers from (i) engaging in further action that results in violations of the Consumer Leasing Act and the Truth in Lending Act; (ii) misrepresenting the cost of financing or leasing a vehicle; and (iii) stating the down payment amount or percentage without also disclosing repayment terms and the annual percentage rate.

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FTC Resolves Claims Against Auto Dealers Based on Alleged Deceptive Advertising

On June 29, the FTC filed two administrative complaints and issued proposed orders against two Las Vegas auto dealers to resolve allegations that they engaged in misleading advertising practices that misrepresented the purchase price or leasing offers of their vehicles, as well as the amount actually due at signing. In addition, the FTC also contends that the auto dealers failed to disclose other key information in its advertisements, such as the need for a security deposit, whether a down payment was required, and the terms of repayment. Under the proposed consent orders, the FTC will require both dealerships to refrain from misrepresenting the actual cost to purchase or lease a vehicle, and to comply with requirements of the Consumer Leasing Act and the Truth in Lending Act. No monetary judgment is proposed for either auto dealership.

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FTC Provides Annual Financial Acts Enforcement Report to CFPB and Federal Reserve

On June 9, the FTC announced that it has provided to the CFPB its 2014 Annual Financial Acts Enforcement Report. The report highlights the FTC’s enforcement, research, rulemaking, and policy development activities with respect to the Truth in Lending Act (Regulation Z), the Consumer Leasing Act (Regulation M), and the Electronic Funds Transfer Act (Regulation E). Areas detailed within the report include enforcement actions related to non-mortgage credit, including auto finance and payday lending, mortgage loan advertising, and forensic audit scams; and consumer and business outreach related to truth in lending requirements.  The report, submitted on May 29, will be used to prepare the CFPB’s Annual Report to Congress. The FTC also submitted a copy of the report to the Federal Reserve Board.

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Federal Register Publishes CFPB Notice to Renew the Approval for the Existing Collection, “Consumer Leasing Act (Regulation M)”

On May 4, the Federal Register published the CFPB’s notice and request for comment, “Consumer Leasing Act (Regulation M) 12 CFR 1013.” The CFPB is requesting to renew the approval of Regulation M without change. Consumers depend on Regulation M to shop for and compare leases, and, under Regulation M’s recordkeeping requirement, federal and state enforcement agencies are able to determine whether consumers receive accurate and complete disclosures of loan costs. Comments regarding the renewal of Regulation M are due on or before July 6, 2015.

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Federal Reserve, CFPB Announce Increased Consumer Credit, Lease Transaction Thresholds

On November 20, the Federal Reserve Board and the CFPB announced an increase in the dollar thresholds in Regulation Z (TILA) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. Transactions at or below the thresholds are subject to the protections of the regulations. Based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1, 2013, TILA and Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $53,500 or less beginning January 1, 2014. Private education loans and loans secured by real property remain subject to TILA regardless of the amount of the loan.

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CFPB and Federal Reserve Board Increase Thresholds for Exempt Consumer Credit and Lease Transactions

On November 20, the CFPB and the Federal Reserve Board announced that, effective January 1, 2013, dollar thresholds in Regulation Z (TILA) and Regulation M (Consumer Leasing Act) for exempt consumer credit and lease transactions will increase to reflect the annual percentage increase in the consumer price index as of June 1, 2012. Transactions at or below the thresholds are subject to the protections of the regulations. Based on the adjustments, the TILA and Consumer Leasing Act protections generally will apply to consumer credit transactions and consumer leases of $53,000 or less in 2013. Mortgage transactions and private student loans remain subject to TILA regardless of the amount of the loan. While the CFPB has rulemaking authority under TILA and the Consumer Leasing Act, the Federal Reserve Board retains authority to issue rules for certain motor vehicle dealers. In addition to the joint adjustment, the CFPB separately adjusted the dollar amount that triggers additional protections for certain home mortgages under the Home Ownership and Equity Protection Act (HOEPA). Consistent with the increase in the consumer price index, the 2013 dollar amount of the HOEPA fee trigger will be $625.

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