83 FR 286 - Consumer Leasing (Regulation M)
FEDERAL RESERVE SYSTEM Federal Register Volume 83, Issue 2 (January 3, 2018)
Federal Register Volume 83, Issue 2 (January 3, 2018)
| Page Range | 286-291 | |
| FR Document | 2017-27325 |
[Federal Register Volume 83, Number 2 (Wednesday, January 3, 2018)] [Proposed Rules] [Pages 286-291] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-27325] ======================================================================== Proposed Rules Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. ======================================================================== Federal Register / Vol. 83, No. 2 / Wednesday, January 3, 2018 / Proposed Rules [[Page 286]] FEDERAL RESERVE SYSTEM 12 CFR Part 213 [Docket No. R-1591] RIN 7100 AE-92 Consumer Leasing (Regulation M) AGENCY: Board of Governors of the Federal Reserve System. ACTION: Notice of proposed rulemaking; request for public comment. ----------------------------------------------------------------------- SUMMARY: The Board of Governors of the Federal Reserve System (Board) is proposing to revise its Regulation M, which was issued to implement the Consumer Leasing Act (CLA). Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for a number of consumer financial protection laws, including the CLA, from the Board to the Bureau of Consumer Financial Protection (Bureau). Under section 1029 of the Dodd-Frank Act, however, the Board retains authority to issue rules for motor vehicle dealers that are predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both, and are otherwise not subject to the Bureau's regulatory authority. The Board is proposing to revise its Regulation M and the accompanying Official Staff Commentary to reflect this change in the persons covered by the Board's Regulation M. DATES: Comments must be received on or before March 5, 2018. ADDRESSES: You may submit comments, identified by Docket No. R-1591 and RIN 7100-AE-92, by any of the following methods:Agency Website: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Email: [email protected]. Include the docket number in the subject line of the message. FAX: (202) 452-3819 or (202) 452-3102. Mail: Ann E. Misback, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551. All public comments are available from the Board's website at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room 3515, 1801 K Street NW (between 18th and 19th Street NW), between 9:00 a.m. and 5:00 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, at (202) 452-3667, Board of Governors of the Federal Reserve System. For users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263- 4869. SUPPLEMENTARY INFORMATION: I. Background and Legal Authority The Consumer Leasing Act of 1976 (CLA), 15 U.S.C. 1667-1667f, was enacted as an amendment to the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The purpose of the CLA is to ensure meaningful and accurate disclosure of the terms of personal property leases for personal, family, or household use ``so as to enable the lessee to compare more readily the various lease terms available to him, limit balloon payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and to assure meaningful and accurate disclosures of lease terms in advertisements.'' TILA Section 102(b), 15 U.S.C. 1601(b).\1\ Before Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act),\2\ the CLA was implemented by the Board's Regulation M, published at 12 CFR part 213. An Official Staff Commentary interprets the requirements of the Board's Regulation M (12 CFR part 213 (Supp. I)). The CLA and Regulation M have generally applied to consumer leases for the use of personal property in which the contractual obligation has a term of more than four months and the lessee's total contractual obligation under the lease does not exceed a specified dollar threshold.\3\ They require lessors to provide consumers with uniform cost and other disclosures about consumer lease transactions. --------------------------------------------------------------------------- \1\ See also 12 CFR 213.1(b). \2\ Public Law 111-203, 124 Stat. 1376 (2010). \3\ The threshold was $54,600 for 2017. See 81 FR 86256 (Nov. 30, 2016). From January 1, 2018, through December 31, 2018, the threshold is set at $55,800. See 82 FR 51977 (Nov. 9, 2017). --------------------------------------------------------------------------- Title X of the Dodd-Frank Act transferred rulemaking authority for the CLA to the Bureau of Consumer Financial Protection (Bureau).\4\ This transfer was effective on July 21, 2011. In connection with the transfer, the Bureau published its own version of Regulation M, 12 CFR part 1013, to implement the CLA (Bureau's Regulation M).\5\ The Bureau's Regulation M substantially duplicates the Board's Regulation M and covers financial institutions and other persons for which the Bureau has rulemaking authority under section 1022 of the Dodd-Frank Act (12 U.S.C. 5512). --------------------------------------------------------------------------- \4\ Public Law 111-203, sections 1061 and 1100A, 124 Stat. 1376, 2035 and 2107 (2010). \5\ 12 CFR part 1013. See 76 FR 78500 (Dec. 19, 2011) (Interim Final Rule). In April 2016, the Bureau adopted the Interim Final Rule as final, subject to any intervening final rules published by the Bureau. See 81 FR 25323 (Apr. 28, 2016). --------------------------------------------------------------------------- Under section 1029(a) and (c) of the Dodd-Frank Act (12 U.S.C. 5519(a) and (c)), the Board retains rulemaking authority under the CLA over certain motor vehicle dealers that are predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.\6\ Thus, except as described below, [[Page 287]] these motor vehicle dealers remain subject to the Board's Regulation M. Authority to enforce Regulation M against motor vehicle dealers subject to the Board's Regulation M is assigned by statute to the FTC.\7\ --------------------------------------------------------------------------- \6\ Dodd-Frank Act section 1029(a) states as follows: ``Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement or any other authority, including any authority to order assessments, 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). Dodd-Frank Act section 1029(c) states as follows: ``Except as provided in subsections (b) and (d) [concerning the Federal Trade Commission (FTC)], nothing in this title [X, Bureau of Consumer Financial Protection], shall be construed as modifying, limiting, or superseding the operation of any provision of Federal law, or otherwise affecting the authority of the Board of Governors, the Federal Trade Commission, or any other Federal agency, with respect to a person described in subsection (a).'' 12 U.S.C. 5519(c). \7\ See TILA section 108(c), 15 U.S.C. 1607(c). See also Dodd- Frank Act section 1029(c) and (d), 12 U.S.C. 5519(c) and (d). --------------------------------------------------------------------------- Section 1029(b) of the Dodd-Frank Act provides that the Bureau's rulemaking authority applies to motor vehicle dealers only to the extent that the dealer is engaged in any of the following activities: Providing consumers with services related to residential or commercial mortgages or self-financing transactions involving real property; Operating 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 is 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 Offering or providing 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). As a result of the transfer of rulemaking authority under the CLA to the Bureau, the Board's Regulation M covers only motor vehicle dealers excluded from the Bureau's rulemaking authority by section 1029 of the Dodd-Frank Act (12 U.S.C. 5519). Consequently, the Board is publishing proposed revisions to Regulation M and the accompanying Official Staff Commentary to reflect the narrower scope of the Board's rulemaking authority. Specific proposed revisions are discussed in the section-by-section analysis below. II. Section-by-Section Analysis Section 213.1 Authority, Scope, Purpose, and Enforcement Section 213.1 addresses matters relating to authority, scope, purpose, and enforcement for Regulation M. To reflect the changed scope of the Board's Regulation M, the Board is proposing revisions to Sec. 213.1 and the Official Staff Commentary to Sec. 213.1, as described below. 1(a) Authority Section 213.1(a) states that Regulation M is issued by the Board to implement the CLA. It also states that information collection requirements contained in Regulation M have been approved by the Office of Management and Budget under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. The Board proposes to remove the sentence referencing information collections. Under the PRA, collections of information are not approved one time; instead collections of information must be reapproved every three years. As discussed in Part V, below, the proposed rule would not impose additional information collections or revise existing information collections for covered entities. 1(b) Scope and Purpose Section 213.1(b) states, in relevant part, that Regulation M applies to all persons that are lessors of personal property under consumer leases as those terms are defined in Sec. 213.2(e)(1) and (h). The Board proposes to revise this section to state additionally that the Board's Regulation M covers only persons identified as persons excluded from the Bureau's rulewriting and other authorities under section 1029 of the Dodd-Frank Act, namely, ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies.'' The Board also proposes to add a new comment 1-1. New comment 1-1 would follow the statutory language to explain the meaning of ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies.'' The proposed comment would clarify that section 1029 of the Dodd-Frank Act (12 U.S.C. 5519) excludes certain motor vehicle dealers from the authority of the Bureau, and that the persons excluded are subject to the rulemaking authority of the Board and the Board's Regulation M. The proposed comment would explain that the Board's regulation generally covers motor vehicle dealers predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both. The comment would further state that, for purposes of the CLA, a motor vehicle dealer is subject to the authority of the Bureau instead of the Board's Regulation M to the extent that the dealer operates a line of business that involves the extension of retail leases involving motor vehicles directly to consumers and the contract governing such extension of retail leases is not routinely assigned to an unaffiliated third party financing or leasing source.\8\ --------------------------------------------------------------------------- \8\ See 12 U.S.C. 5519(b). --------------------------------------------------------------------------- The proposed comment also would clarify that, for determining the persons covered by the Board's Regulation M, the terms ``motor vehicle'' and ``motor vehicle dealer'' have the meanings assigned to them by section 1029 of the Dodd-Frank Act.\9\ Otherwise, in applying the Board's Regulation M, determining whether leased property is a motor vehicle would continue to be governed by state or other applicable law. See comment 4(f)-1. --------------------------------------------------------------------------- \9\ See 12 U.S.C. 5519(f). --------------------------------------------------------------------------- The Board also proposes to re-number current comment 1-1 as comment 1-2 and revise it. Current comment 1-1 explains the applicability of Regulation M to foreign entities. This comment states that Regulation M applies to all persons (including branches of foreign banks or leasing companies located in the United States) that offer consumer leases to residents of any state (including foreign nationals) as defined in Sec. 213.2(p). This comment further explains that Regulation M does not apply to a foreign branch of a U.S. bank or to a leasing company leasing to a U.S. citizen residing or visiting abroad or to a foreign national abroad. The Board proposes to revise comment 1-1 (which would be re-numbered 1-2) to reflect that the Board's Regulation M now applies solely to ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies.'' Thus, in the first sentence of proposed comment 1-2, the reference to U.S. branches of foreign banks and leasing companies and to foreign branches of U.S. banks would be replaced by a reference to ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies.'' The revised comment would state that the Board's Regulation M applies to ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies'' that offer consumer leases to residents of any state (including foreign nationals) as defined in Sec. 213.2(p). The Board proposes to remove the second sentence of the comment, which states that Regulation M does not apply to ``a foreign branch of a U.S. bank or to a leasing company leasing to a U.S. citizen residing or visiting abroad or to a foreign national abroad.'' This sentence addresses financial institution lessors that have worldwide branching networks. The Board does not believe that motor vehicle dealers intended to be covered by the Board's Regulation M operate in this way, and therefore believes that this guidance is inapplicable. These proposed changes are intended to reflect only the new scope of the Board's Regulation M under the Dodd-Frank Act and are not intended to [[Page 288]] change the substantive principles of foreign applicability expressed in the comment. The Board invites comments on the proposed changes. Section 213.2 Definitions 2(e) Consumer Lease Section 213.2(e) defines ``consumer lease'' under Regulation M. The Board proposes no changes to the current definition, but proposes to eliminate comment 2(e)-7 and comment 2(e)-8 as unnecessary because the regulation's coverage is now limited to certain motor vehicle lessors and these comments address leases outside of motor vehicle and motor vehicle-related leasing. Accordingly, the Board also proposes to re- number comments 2(e)-9, 2(e)-10, and 2(e)-11 as comments 2(e)-7, 2(e)- 8, and 2(e)-9, respectively, and make certain non-substantive technical revisions. Current comment 2(e)-7 identifies the specific types of leases of personal property considered incidental to a service and therefore not subject to Regulation M. These are home entertainment systems requiring the consumer to lease equipment that enables a television to receive the transmitted programming; 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; and propane gas service where the consumer must lease a propane tank to receive the service. Comment 2(e)-8 states that the lease of a safe deposit box is not a consumer lease under Sec. 213.2(e). Section 213.4 Content of Disclosures Section 213.4 identifies the information that a lessor must disclose to a consumer before consummation of a consumer lease. The Board is not proposing any revisions to the content of disclosures for motor vehicle leases. Comment is solicited on whether any revisions to Sec. 213.4 are appropriate in light of the narrower coverage of the Board's regulation as a result of the Dodd-Frank Act. 4(t) Non-Motor Vehicle Open-End Leases Section 213.4(t) applies to non-motor vehicle, open-end leases and refers to the statutory requirement to provide certain disclosures if the lessee is liable at the end of the lease term for the anticipated fair market value of the leased property. The Board is proposing to delete this provision as unnecessary in light of the regulation's application only to certain motor vehicle dealers. The Board solicits comment on whether covered dealers might offer non-vehicle open-end leases for ``related or ancillary products'' that would be covered by the Board's Regulation M \10\ and, if so, whether such leases would have end-of-term liability as referenced in existing Sec. 213.4(t). --------------------------------------------------------------------------- \10\ Dodd-Frank Act section 1029(b)(3), 15 U.S.C. 5519(b)(3). --------------------------------------------------------------------------- Section 213.7 Advertising 7(a) Authority Section 213.7 prescribes rules for advertising consumer leases. Comment 7(a)-1 explains who is covered by the advertising rules. Currently, the comment states that all ``persons'' must comply with the advertising rules, not just those that meet the definition of a lessor. Thus, ``automobile dealers, merchants, and others'' must comply with the advertising rules if they advertise consumer lease transactions, even if they are not themselves lessors. The comment clarifies, however, that owners and personnel of the media in which an advertisement appears or through which it is disseminated are not subject to civil liability for violations under section 185(b) of the CLA (15 U.S.C. 1667d(b)). The Board proposes to revise this comment to reflect the limited scope of the Board's Regulation M. Thus, the proposed comment would state that ``motor vehicle dealers to which 12 U.S.C. 5519(a) applies'' must comply with the advertising provisions in this section. The Board also proposes to revise the subsequent sentence, which would state that motor vehicle dealers to which 12 U.S.C. 5519(a) applies that are not themselves lessors also must comply with the advertising provisions of the regulation if they advertise consumer lease transactions. In addition, the Board proposes to remove the last sentence of comment 7(a)-1, which states that owners and personnel of the media in which an advertisement appears or through which it is disseminated are not subject to civil liability for violations of the advertising provisions.\11\ The sentence is no longer necessary because those persons are no longer covered by the Board's Regulation M. --------------------------------------------------------------------------- \11\ See 15 U.S.C. 1667c(b) and 1667d(b). --------------------------------------------------------------------------- Appendix A to Part 213--Model Forms Appendix A-3--Model Furniture Lease Disclosures Appendix A-3 to part 213 contains model disclosures for furniture leases. The Board proposes to eliminate the model furniture lease disclosures in appendix A-3 and accompanying Official Staff comment 4 to appendix A as inapplicable given the limited scope of the Board's Regulation M prescribed by section 1029 of the Dodd-Frank Act. 15 U.S.C. 5519. Furniture leases are no longer covered by the Board's Regulation M because furniture leasing is not an activity related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or servicing of motor vehicles.\12\ --------------------------------------------------------------------------- \12\ Dodd-Frank Act section 1029(b)(3), 15 U.S.C. 5519(b)(3). --------------------------------------------------------------------------- Appendix B--Federal Enforcement Agencies Appendix B to part 213 identifies which federal agency enforces Regulation M for particular classes of businesses. The Bureau eliminated this appendix in its Regulation M.\13\ The Board proposes to simplify the regulation by also eliminating this appendix, which is not necessary to implement the CLA. Enforcement of Regulation M is appropriately addressed in Sec. 213.1(c), which references the relevant CLA provisions on enforcement and liability. --------------------------------------------------------------------------- \13\ 76 FR 78500 (Dec. 19, 2011) (``Appendix B, entitled `Federal Enforcement Agencies,' has been eliminated, because it was designed to be informational only and is unnecessary for purposes of implementing the CLA.''). See also 81 FR 25323 (Apr. 28, 2016). --------------------------------------------------------------------------- III. Request for Comment The Board requests comment on the proposed revisions, which are not intended to alter the substantive requirements of the CLA and existing Regulation M, and invites commenters to identify any additional revisions to the Board's Regulation M that commenters believe are necessary in light of section 1029 of the Dodd-Frank Act (12 U.S.C. 5519). IV. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) generally requires an agency to perform an assessment of the impact a rule is expected to have on small entities. Based on its analysis, and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial number of small entities. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period. 1. Statement of the need for, and objectives of, the proposed rule. Title X of the Dodd-Frank Act transferred rulemaking authority for a number of [[Page 289]] consumer financial protection laws from the Board to the Bureau, effective July 21, 2011, including the CLA. The Bureau issued the Bureau Interim Final Rule to implement CLA in connection with the transfer of CLA rulemaking authority to the Bureau. Pursuant to Section 1029 of the Dodd-Frank Act, however, the Board retains rulemaking authority for consumer financial protection laws to the extent that such laws could cover motor vehicle dealers identified in Section 1029(a) of the Dodd-Frank Act. The Board does not believe that any motor vehicle dealers identified in Section 1029(a) would incur any additional compliance burden as a result of the Board's proposal, because these entities are already subject to the Board's Regulation M and no substantive changes to Regulation M's requirements are proposed. 2. Small entities affected by the proposed rule. The Board does not believe that any motor vehicle dealers identified in Section 1029(a) would incur additional compliance burden as a result of the Board's proposal, because these entities are already subject to the Board's Regulation M. Therefore, the Board believes the proposed rule would not affect any entity, including any small entity. 3. Recordkeeping, reporting, and compliance requirements. The proposed rule would re-state, without substantive revisions, the Board's Regulation M, 12 CFR part 213, and would therefore not impose any new recordkeeping, reporting, or compliance requirements on any entities. 4. Other federal rules. The Board has not identified any federal rules that duplicate, overlap, or conflict with the proposed restatement of the Board's Regulation M, 12 CFR part 213. 5. Significant alternatives to the proposed revisions. The Board is not aware of any significant alternatives that would further minimize any significant economic impact of the proposed rule on small entities, but solicits comment on this matter. V. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA), federal agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Board reviewed the proposed rule and determined that it does not create any new or revise any existing collection of information under section 3504(h) of title 44. List of Subjects in 12 CFR Part 213 Advertising, Consumer leasing, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements. For the reasons discussed in the Supplementary Information, the Board proposes to amend Regulation M, 12 CFR part 213, as follows: PART 213--CONSUMER LEASING (REGULATION M) 0 1. The authority citation for part 213 is revised to read as follows: Authority: 12 U.S.C. 5519; 15 U.S.C. 1604 and 1667f; Sec. 1100E, Pub. L. 111-203, 124 Stat. 1376 (15 U.S.C. 1603 note). 0 2. Section 213.1 is amended by revising paragraph (a) and paragraph (b) introductory text to read as follows: Sec. 213.1 Authority, scope, purpose, and enforcement. (a) Authority. The regulation in this part, known as Regulation M, is issued by the Board of Governors of the Federal Reserve System to implement the consumer leasing provisions of the Truth in Lending Act, which is title I of the Consumer Credit Protection Act, as amended (15 U.S.C. 1601 et seq.). (b) Scope and purpose. This part applies to all persons that are lessors of personal property under consumer leases as those terms are defined in Sec. 213.2(e)(1) and (h) and that are motor vehicle dealers to which 12 U.S.C. 5519(a) applies. The purpose of this part is-- * * * * * Sec. 213.4 [Amended] 0 3. Section 213.4(t) is removed. Appendix A to Part 213--[Amended] 0 4. Appendix A to part 213 is amended by removing and reserving section A-3. Appendix B to Part 213--[Removed and Reserved] 0 5. Appendix B to part 213 is removed and reserved. 0 6. In supplement I to part 213: 0 a. Section 213.1--Authority, Scope, Purpose, and Enforcement is revised. 0 b. Under Section 213.2--Definitions, subsection 2(e) Consumer lease is revised. 0 c. Under Section 213.7--Advertising, subsection 7(a) General rule is revised. 0 d. Appendix A--Model Forms is revised. The revisions read as follows: Supplement I to Part 226--Official Staff Commentary to Regulation M * * * * * Section 213.1--Authority, Scope, Purpose, and Enforcement 1. Motor vehicle dealers to which 12 U.S.C. 5519(a) applies. Section 1029 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010), excludes certain motor vehicle dealers from the authority of the Bureau of Consumer Financial Protection (Bureau). See 12 U.S.C. 5519. The persons excluded from the authority of the Bureau by that provision are subject to the authority of the Board and this part, and generally are motor vehicle dealers predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both. However, for purposes of the Consumer Leasing Act, 15 U.S.C. 1667- 1667f, a motor vehicle dealer is subject to the authority of the Bureau instead of the Board's Regulation M to the extent that the dealer operates a line of business that involves the extension of retail leases involving motor vehicles directly to consumers and the contract governing such extension of retail leases is not routinely assigned to an unaffiliated third party financing or leasing source. See 12 U.S.C. 5519(b). Accordingly, for determining the persons covered by the Board's Regulation M, ``motor vehicle'' and ``motor vehicle dealer'' have the meanings assigned to them by section 1029 of the Dodd-Frank Act. See 12 U.S.C. 5519(f). Otherwise, in applying the Board's Regulation M, whether leased property is a motor vehicle is determined by state or other applicable law. See comment 4(f)-1. 2. Foreign applicability. Regulation M applies to motor vehicle dealers to which 12 U.S.C. 5519(a) applies that offer consumer leases to residents of any state (including foreign nationals) as defined in Sec. 213.2(p). 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 [[Page 290]] 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. 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)-9 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)-9 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. 8. 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. 9. 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, 2017 through December 31, 2018, the threshold amount is $55,800. * * * * * Section 213.7--Advertising 7(a) General rule. 1. Persons covered. Motor vehicle dealers to which 12 U.S.C. 5519(a) applies must comply with the advertising provisions in this section, not just those that meet the definition of a lessor in Sec. 213.2(h). Thus, motor vehicle dealers to which 12 U.S.C. 5519(a) applies who are not themselves lessors must comply with the advertising provisions of the regulation if they advertise consumer lease transactions. 2. ``Usually and customarily.'' Section 213.7(a) does not prohibit the advertising of a single item or the promotion of a new leasing program, but prohibits the advertising of terms that are not and will not be available. Thus, an advertisement may state terms that will be offered for only a limited period or terms that will become available at a future date. 3. Total contractual obligation of advertised lease. Section 213.7 applies to advertisements for consumer leases, as defined in Sec. 213.2(e). Under Sec. 213.2(e), a consumer lease is exempt [[Page 291]] from the requirements of this Part if the total contractual obligation exceeds the threshold amount in effect at the time of consummation. See comment 2(e)-9. Accordingly, Sec. 213.7 does not apply to an advertisement for a specific consumer lease if the total contractual obligation for that lease exceeds the threshold amount in effect when the advertisement is made. If a lessor promotes multiple consumer leases in a single advertisement, the entire advertisement must comply with Sec. 213.7 unless all of the advertised leases are exempt under Sec. 213.2(e). For example i. Assume that, in an advertisement, a lessor states that certain terms apply to a consumer lease for a specific automobile. The total contractual obligation of the advertised lease exceeds the threshold amount in effect when the advertisement is made. Although the advertisement does not refer to any other lease, some or all of the advertised terms for the exempt lease also apply to other leases offered by the lessor with total contractual obligations that do not exceed the applicable threshold amount. The advertisement is not required to comply with Sec. 213.7 because it refers only to an exempt lease. ii. Assume that, in an advertisement, a lessor states certain terms (such as the amount due at lease signing) that will apply to consumer leases for automobiles of a particular brand. However, the advertisement does not refer to a specific lease. The total contractual obligations of the leases for some of the automobiles will exceed the threshold amount in effect when the advertisement is made, but the total contractual obligations of the leases for other automobiles will not exceed the threshold. The entire advertisement must comply with Sec. 213.7 because it refers to terms for consumer leases that are not exempt. iii. Assume that, in a single advertisement, a lessor states that certain terms apply to consumer leases for two different automobiles. The total contractual obligation of the lease for the first automobile exceeds the threshold amount in effect when the advertisement is made, but the total contractual obligation of the lease for the second automobile does not exceed the threshold. The entire advertisement must comply with Sec. 213.7 because it refers to a consumer lease that is not exempt. * * * * * Appendix A--Model Forms 1. Permissible changes. Although use of the model forms is not required, lessors using them properly will be deemed to be in compliance with the regulation. Generally, lessors may make certain changes in the format or content of the forms and may delete any disclosures that are inapplicable to a transaction without losing the act's protection from liability. For example, the model form based on monthly periodic payments may be modified for single-payment lease transactions or for quarterly or other regular or irregular periodic payments. The model form may also be modified to reflect that a transaction is an extension. The content, format, and headings for the segregated disclosures must be substantially similar to those contained in the model forms; therefore, any changes should be minimal. The changes to the model forms should not be so extensive as to affect the substance and the clarity of the disclosures. 2. Examples of acceptable changes. i. Using the first person, instead of the second person, in referring to the lessee. ii. Using ``lessee,'' ``lessor,'' or names instead of pronouns. iii. Rearranging the sequence of the nonsegregated disclosures. iv. Incorporating certain state ``plain English'' requirements. v. Deleting or blocking out inapplicable disclosures, filling in ``N/A'' (not applicable) or ``0,'' crossing out, leaving blanks, checking a box for applicable items, or circling applicable items (this should facilitate use of multipurpose standard forms). vi. Adding language or symbols to indicate estimates. vii. Adding numeric or alphabetic designations. viii. Rearranging the disclosures into vertical columns, except for Sec. 213.4(b) through (e) disclosures. ix. Using icons and other graphics. 3. Model closed-end or net vehicle lease disclosure. Model A-2 is designed for a closed-end or net vehicle lease. Under the ``Early Termination and Default'' provision a reference to the lessee's right to an independent appraisal of the leased vehicle under Sec. 213.4(l) is included for those closed-end leases in which the lessee's liability at early termination is based on the vehicle's realized value. By order of the Board of Governors of the Federal Reserve System. Ann E. Misback, Secretary of the Board. [FR Doc. 2017-27325 Filed 1-2-18; 8:45 am] BILLING CODE 6210-01-P
![286
Proposed Rules Federal Register
Vol. 83, No. 2
Wednesday, January 3, 2018
This section of the FEDERAL REGISTER • Email: regs.comments@ requirements of the Board’s Regulation
contains notices to the public of the proposed federalreserve.gov. Include the docket M (12 CFR part 213 (Supp. I)). The CLA
issuance of rules and regulations. The number in the subject line of the and Regulation M have generally
purpose of these notices is to give interested message. applied to consumer leases for the use
persons an opportunity to participate in the • FAX: (202) 452–3819 or (202) 452– of personal property in which the
rule making prior to the adoption of the final
3102. contractual obligation has a term of
rules.
• Mail: Ann E. Misback, Secretary, more than four months and the lessee’s
Board of Governors of the Federal total contractual obligation under the
FEDERAL RESERVE SYSTEM Reserve System, 20th Street and lease does not exceed a specified dollar
Constitution Avenue NW, Washington, threshold.3 They require lessors to
12 CFR Part 213 DC 20551. provide consumers with uniform cost
All public comments are available and other disclosures about consumer
[Docket No. R–1591] from the Board’s website at http:// lease transactions.
www.federalreserve.gov/generalinfo/ Title X of the Dodd-Frank Act
RIN 7100 AE–92
foia/ProposedRegs.cfm as submitted, transferred rulemaking authority for the
Consumer Leasing (Regulation M) unless modified for technical reasons. CLA to the Bureau of Consumer
Accordingly, your comments will not be Financial Protection (Bureau).4 This
AGENCY: Board of Governors of the edited to remove any identifying or transfer was effective on July 21, 2011.
Federal Reserve System. contact information. Public comments In connection with the transfer, the
ACTION: Notice of proposed rulemaking; may also be viewed electronically or in Bureau published its own version of
request for public comment. paper form in Room 3515, 1801 K Street Regulation M, 12 CFR part 1013, to
NW (between 18th and 19th Street NW), implement the CLA (Bureau’s
SUMMARY: The Board of Governors of the between 9:00 a.m. and 5:00 p.m. on Regulation M).5 The Bureau’s
Federal Reserve System (Board) is weekdays. Regulation M substantially duplicates
proposing to revise its Regulation M, the Board’s Regulation M and covers
FOR FURTHER INFORMATION CONTACT:
which was issued to implement the financial institutions and other persons
Consumer Leasing Act (CLA). Title X of Lorna M. Neill, Senior Counsel,
for which the Bureau has rulemaking
the Dodd-Frank Wall Street Reform and Division of Consumer and Community
authority under section 1022 of the
Consumer Protection Act (Dodd-Frank Affairs, at (202) 452–3667, Board of
Dodd-Frank Act (12 U.S.C. 5512).
Act) transferred rulemaking authority Governors of the Federal Reserve Under section 1029(a) and (c) of the
for a number of consumer financial System. For users of Dodd-Frank Act (12 U.S.C. 5519(a) and
protection laws, including the CLA, Telecommunications Device for the Deaf (c)), the Board retains rulemaking
from the Board to the Bureau of (TDD) only, contact (202) 263–4869. authority under the CLA over certain
Consumer Financial Protection SUPPLEMENTARY INFORMATION: motor vehicle dealers that are
(Bureau). Under section 1029 of the I. Background and Legal Authority predominantly engaged in the sale and
Dodd-Frank Act, however, the Board servicing of motor vehicles, the leasing
retains authority to issue rules for motor The Consumer Leasing Act of 1976 and servicing of motor vehicles, or
vehicle dealers that are predominantly (CLA), 15 U.S.C. 1667–1667f, was both.6 Thus, except as described below,
engaged in the sale and servicing of enacted as an amendment to the Truth
motor vehicles, the leasing and in Lending Act (TILA), 15 U.S.C. 1601 3 The threshold was $54,600 for 2017. See 81 FR
servicing of motor vehicles, or both, and et seq. The purpose of the CLA is to 86256 (Nov. 30, 2016). From January 1, 2018,
are otherwise not subject to the Bureau’s ensure meaningful and accurate through December 31, 2018, the threshold is set at
disclosure of the terms of personal $55,800. See 82 FR 51977 (Nov. 9, 2017).
regulatory authority. The Board is 4 Public Law 111–203, sections 1061 and 1100A,
proposing to revise its Regulation M and property leases for personal, family, or 124 Stat. 1376, 2035 and 2107 (2010).
the accompanying Official Staff household use ‘‘so as to enable the 5 12 CFR part 1013. See 76 FR 78500 (Dec. 19,
Commentary to reflect this change in the lessee to compare more readily the 2011) (Interim Final Rule). In April 2016, the
various lease terms available to him, Bureau adopted the Interim Final Rule as final,
persons covered by the Board’s subject to any intervening final rules published by
Regulation M. limit balloon payments in consumer the Bureau. See 81 FR 25323 (Apr. 28, 2016).
leasing, enable comparison of lease 6 Dodd-Frank Act section 1029(a) states as
DATES: Comments must be received on terms with credit terms where follows: ‘‘Except as permitted in subsection (b), the
or before March 5, 2018. appropriate, and to assure meaningful Bureau may not exercise any rulemaking,
ADDRESSES: You may submit comments, supervisory, enforcement or any other authority,
and accurate disclosures of lease terms including any authority to order assessments, over
identified by Docket No. R–1591 and in advertisements.’’ TILA Section a motor vehicle dealer that is predominantly
RIN 7100–AE–92, by any of the 102(b), 15 U.S.C. 1601(b).1 Before engaged in the sale and servicing of motor vehicles,
following methods: the leasing and servicing of motor vehicles, or
jstallworth on DSKBBY8HB2PROD with PROPOSALS
Congress enacted the Dodd-Frank Wall
• Agency Website: http:// Street Reform and Consumer Protection both.’’ 12 U.S.C. 5519(a).
Dodd-Frank Act section 1029(c) states as follows:
www.federalreserve.gov. Follow the Act (Dodd-Frank Act),2 the CLA was ‘‘Except as provided in subsections (b) and (d)
instructions for submitting comments at implemented by the Board’s Regulation [concerning the Federal Trade Commission (FTC)],
http://www.federalreserve.gov/ M, published at 12 CFR part 213. An nothing in this title [X, Bureau of Consumer
generalinfo/foia/ProposedRegs.cfm. Financial Protection], shall be construed as
Official Staff Commentary interprets the modifying, limiting, or superseding the operation of
• Federal eRulemaking Portal: http:// any provision of Federal law, or otherwise affecting
www.regulations.gov. Follow the 1 See also 12 CFR 213.1(b). the authority of the Board of Governors, the Federal
instructions for submitting comments. 2 Public Law 111–203, 124 Stat. 1376 (2010). Trade Commission, or any other Federal agency,
VerDate Sep<11>2014 15:19 Jan 02, 2018 Jkt 244001 PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 E:\FR\FM\03JAP1.SGM 03JAP1](https://thefederalregister.org/doc/83_FR_288/page/1.svg)
![Federal Register / Vol. 83, No. 2 / Wednesday, January 3, 2018 / Proposed Rules 289
consumer financial protection laws from List of Subjects in 12 CFR Part 213 Section 213.1—Authority, Scope,
the Board to the Bureau, effective July Advertising, Consumer leasing, Purpose, and Enforcement
21, 2011, including the CLA. The Consumer protection, Federal Reserve 1. Motor vehicle dealers to which 12
Bureau issued the Bureau Interim Final System, Reporting and recordkeeping U.S.C. 5519(a) applies. Section 1029 of
Rule to implement CLA in connection requirements. the Dodd-Frank Wall Street Reform and
with the transfer of CLA rulemaking Consumer Protection Act, Public Law
authority to the Bureau. Pursuant to For the reasons discussed in the
Supplementary Information, the Board 111–203, 124 Stat. 1376 (2010),
Section 1029 of the Dodd-Frank Act, excludes certain motor vehicle dealers
however, the Board retains rulemaking proposes to amend Regulation M, 12
CFR part 213, as follows: from the authority of the Bureau of
authority for consumer financial
Consumer Financial Protection
protection laws to the extent that such
PART 213—CONSUMER LEASING (Bureau). See 12 U.S.C. 5519. The
laws could cover motor vehicle dealers
(REGULATION M) persons excluded from the authority of
identified in Section 1029(a) of the
the Bureau by that provision are subject
Dodd-Frank Act. The Board does not
■ 1. The authority citation for part 213 to the authority of the Board and this
believe that any motor vehicle dealers
is revised to read as follows: part, and generally are motor vehicle
identified in Section 1029(a) would
Authority: 12 U.S.C. 5519; 15 U.S.C. 1604 dealers predominantly engaged in the
incur any additional compliance burden
and 1667f; Sec. 1100E, Pub. L. 111–203, 124 sale and servicing of motor vehicles, the
as a result of the Board’s proposal,
because these entities are already Stat. 1376 (15 U.S.C. 1603 note). leasing and servicing of motor vehicles,
subject to the Board’s Regulation M and or both. However, for purposes of the
■ 2. Section 213.1 is amended by
no substantive changes to Regulation Consumer Leasing Act, 15 U.S.C. 1667–
revising paragraph (a) and paragraph (b)
M’s requirements are proposed. 1667f, a motor vehicle dealer is subject
introductory text to read as follows:
2. Small entities affected by the to the authority of the Bureau instead of
proposed rule. The Board does not § 213.1 Authority, scope, purpose, and the Board’s Regulation M to the extent
believe that any motor vehicle dealers enforcement. that the dealer operates a line of
identified in Section 1029(a) would (a) Authority. The regulation in this business that involves the extension of
incur additional compliance burden as part, known as Regulation M, is issued retail leases involving motor vehicles
a result of the Board’s proposal, because by the Board of Governors of the Federal directly to consumers and the contract
these entities are already subject to the Reserve System to implement the governing such extension of retail leases
Board’s Regulation M. Therefore, the consumer leasing provisions of the is not routinely assigned to an
Board believes the proposed rule would Truth in Lending Act, which is title I of unaffiliated third party financing or
not affect any entity, including any the Consumer Credit Protection Act, as leasing source. See 12 U.S.C. 5519(b).
small entity. amended (15 U.S.C. 1601 et seq.). Accordingly, for determining the
3. Recordkeeping, reporting, and (b) Scope and purpose. This part persons covered by the Board’s
compliance requirements. The proposed applies to all persons that are lessors of Regulation M, ‘‘motor vehicle’’ and
rule would re-state, without substantive personal property under consumer ‘‘motor vehicle dealer’’ have the
revisions, the Board’s Regulation M, 12 leases as those terms are defined in meanings assigned to them by section
CFR part 213, and would therefore not § 213.2(e)(1) and (h) and that are motor 1029 of the Dodd-Frank Act. See 12
impose any new recordkeeping, vehicle dealers to which 12 U.S.C. U.S.C. 5519(f). Otherwise, in applying
reporting, or compliance requirements 5519(a) applies. The purpose of this part the Board’s Regulation M, whether
on any entities. is— leased property is a motor vehicle is
4. Other federal rules. The Board has * * * * * determined by state or other applicable
not identified any federal rules that law. See comment 4(f)–1.
duplicate, overlap, or conflict with the § 213.4 [Amended] 2. Foreign applicability. Regulation M
proposed restatement of the Board’s ■ 3. Section 213.4(t) is removed. applies to motor vehicle dealers to
Regulation M, 12 CFR part 213. which 12 U.S.C. 5519(a) applies that
5. Significant alternatives to the Appendix A to Part 213—[Amended] offer consumer leases to residents of any
proposed revisions. The Board is not ■ 4. Appendix A to part 213 is amended state (including foreign nationals) as
aware of any significant alternatives that by removing and reserving section A–3. defined in § 213.2(p).
would further minimize any significant
Appendix B to Part 213—[Removed and Section 213.2—Definitions
economic impact of the proposed rule
Reserved] * * * * *
on small entities, but solicits comment
on this matter. ■ 5. Appendix B to part 213 is removed 2(e) Consumer lease.
and reserved. 1. Primary purposes. A lessor must
V. Paperwork Reduction Act ■ 6. In supplement I to part 213: determine in each case if the leased
In accordance with the requirements ■ a. Section 213.1—Authority, Scope, property will be used primarily for
of the Paperwork Reduction Act of 1995 Purpose, and Enforcement is revised. personal, family, or household
(44 U.S.C. 3501–3521) (PRA), federal ■ b. Under Section 213.2—Definitions, purposes. If a question exists as to the
agencies may not conduct or sponsor, subsection 2(e) Consumer lease is primary purpose for a lease, the fact that
and a respondent is not required to revised. a lessor gives disclosures is not
respond to, an information collection ■ c. Under Section 213.7—Advertising, controlling on the question of whether
jstallworth on DSKBBY8HB2PROD with PROPOSALS
unless it displays a currently valid subsection 7(a) General rule is revised. the transaction is covered. The primary
Office of Management and Budget ■ d. Appendix A—Model Forms is purpose of a lease is determined before
(OMB) control number. The Board revised. or at consummation and a lessor need
reviewed the proposed rule and The revisions read as follows: not provide Regulation M disclosures
determined that it does not create any where there is a subsequent change in
new or revise any existing collection of Supplement I to Part 226—Official Staff the primary use.
information under section 3504(h) of Commentary to Regulation M 2. Period of time. To be a consumer
title 44. * * * * * lease, the initial term of the lease must
VerDate Sep<11>2014 15:19 Jan 02, 2018 Jkt 244001 PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 E:\FR\FM\03JAP1.SGM 03JAP1](https://thefederalregister.org/doc/83_FR_288/page/4.svg)
![Federal Register / Vol. 83, No. 2 / Wednesday, January 3, 2018 / Proposed Rules 291
from the requirements of this Part if the deemed to be in compliance with the SECURITIES AND EXCHANGE
total contractual obligation exceeds the regulation. Generally, lessors may make COMMISSION
threshold amount in effect at the time of certain changes in the format or content
consummation. See comment 2(e)–9. of the forms and may delete any 17 CFR Part 200
Accordingly, § 213.7 does not apply to disclosures that are inapplicable to a [Release Nos. 34–82373; FOIA–192; File No.
an advertisement for a specific transaction without losing the act’s S7–09–17]
consumer lease if the total contractual protection from liability. For example,
obligation for that lease exceeds the RIN 3235–AM25
the model form based on monthly
threshold amount in effect when the periodic payments may be modified for
advertisement is made. If a lessor Freedom of Information Act
single-payment lease transactions or for Regulations
promotes multiple consumer leases in a quarterly or other regular or irregular
single advertisement, the entire periodic payments. The model form AGENCY: Securities and Exchange
advertisement must comply with § 213.7 may also be modified to reflect that a Commission.
unless all of the advertised leases are transaction is an extension. The content, ACTION: Proposed rule.
exempt under § 213.2(e). For example format, and headings for the segregated
i. Assume that, in an advertisement, a SUMMARY: The Securities and Exchange
disclosures must be substantially
lessor states that certain terms apply to Commission (‘‘Commission’’ or ‘‘SEC’’)
a consumer lease for a specific similar to those contained in the model
forms; therefore, any changes should be is publishing for comment proposed
automobile. The total contractual amendments to the Commission’s
obligation of the advertised lease minimal. The changes to the model
forms should not be so extensive as to regulations under the Freedom of
exceeds the threshold amount in effect Information Act (‘‘FOIA’’). This rule
when the advertisement is made. affect the substance and the clarity of
proposes revisions to the Commission’s
Although the advertisement does not the disclosures.
regulations under the FOIA to reflect
refer to any other lease, some or all of 2. Examples of acceptable changes. changes required by the FOIA
the advertised terms for the exempt i. Using the first person, instead of the Improvement Act of 2016
lease also apply to other leases offered second person, in referring to the lessee. (‘‘Improvement Act’’); and clarify,
by the lessor with total contractual update, and streamline the language of
obligations that do not exceed the ii. Using ‘‘lessee,’’ ‘‘lessor,’’ or names
several procedural provisions.
applicable threshold amount. The instead of pronouns.
DATES: Comments should be received by
advertisement is not required to comply iii. Rearranging the sequence of the February 2, 2018.
with § 213.7 because it refers only to an nonsegregated disclosures.
exempt lease. ADDRESSES: Comments may be
iv. Incorporating certain state ‘‘plain submitted by any of the following
ii. Assume that, in an advertisement,
English’’ requirements. methods:
a lessor states certain terms (such as the
amount due at lease signing) that will v. Deleting or blocking out Electronic Comments
apply to consumer leases for inapplicable disclosures, filling in ‘‘N/
automobiles of a particular brand. A’’ (not applicable) or ‘‘0,’’ crossing out, • Use the Commission’s internet
However, the advertisement does not leaving blanks, checking a box for comment form located at http://
refer to a specific lease. The total applicable items, or circling applicable www.sec.gov/rules/proposed.shtml;
contractual obligations of the leases for items (this should facilitate use of • Send an email to rule-comments@
some of the automobiles will exceed the multipurpose standard forms). sec.gov, including File Number S7–09–
threshold amount in effect when the 17 on the subject line; or
vi. Adding language or symbols to • Use the Federal eRulemaking Portal
advertisement is made, but the total indicate estimates.
contractual obligations of the leases for located at http://www.regulations.gov,
other automobiles will not exceed the vii. Adding numeric or alphabetic following the instructions for submitting
threshold. The entire advertisement designations. comments.
must comply with § 213.7 because it viii. Rearranging the disclosures into Paper Comments
refers to terms for consumer leases that vertical columns, except for § 213.4(b)
are not exempt. through (e) disclosures. • Send paper comments to Secretary,
iii. Assume that, in a single Securities and Exchange Commission,
ix. Using icons and other graphics. 100 F Street NE, Washington, DC
advertisement, a lessor states that
certain terms apply to consumer leases 3. Model closed-end or net vehicle 20549–1090.
for two different automobiles. The total lease disclosure. Model A–2 is designed All submissions should refer to File
contractual obligation of the lease for for a closed-end or net vehicle lease. Number S7–09–17. This file number
the first automobile exceeds the Under the ‘‘Early Termination and should be included on the subject line
threshold amount in effect when the Default’’ provision a reference to the if email is used. To help us process and
advertisement is made, but the total lessee’s right to an independent review your comments more efficiently,
contractual obligation of the lease for appraisal of the leased vehicle under please use only one method. The
the second automobile does not exceed § 213.4(l) is included for those closed- Commission will post all comments on
the threshold. The entire advertisement end leases in which the lessee’s liability the Commission’s internet website
must comply with § 213.7 because it at early termination is based on the (http://www.sec.gov/rules/
jstallworth on DSKBBY8HB2PROD with PROPOSALS
refers to a consumer lease that is not vehicle’s realized value. proposed.shtml). Comments are also
exempt. By order of the Board of Governors of the available for website viewing and
* * * * * Federal Reserve System. printing in the Commission’s Public
Reference Room, 100 F Street NE,
Appendix A—Model Forms Ann E. Misback,
Washington DC 20549, on official
1. Permissible changes. Although use Secretary of the Board. working days between the hours of
of the model forms is not required, [FR Doc. 2017–27325 Filed 1–2–18; 8:45 am] 10:00 a.m. and 3:00 p.m. All comments
lessors using them properly will be BILLING CODE 6210–01–P received will be posted without change.
VerDate Sep<11>2014 15:19 Jan 02, 2018 Jkt 244001 PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 E:\FR\FM\03JAP1.SGM 03JAP1](https://thefederalregister.org/doc/83_FR_288/page/6.svg)
Document Created: 2018-10-26 09:27:14
Document Modified: 2018-10-26 09:27:14
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Notice of proposed rulemaking; request for public comment. | |
| Dates | Comments must be received on or before March 5, 2018. | |
| Contact | Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, at (202) 452-3667, Board of Governors of the Federal Reserve System. For users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263- 4869. | |
| FR Citation | 83 FR 286 | |
| RIN Number | 7100 AE92 | |
| CFR Associated | Advertising; Consumer Leasing; Consumer Protection; Federal Reserve System and Reporting and Recordkeeping Requirements |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR