83318 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

5 12 CFR 209.1(d)(3). 

6 12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii); 

209.2(a); and 209.3(d)(5). 

7 12 CFR 209.4(f). 

8 81 FR 84415, 84417 (Nov. 23, 2016). 

9The BEA makes ongoing revisions to its 

estimates of the Gross Domestic Product Price Index 

for historical calendar quarters. The Board 

calculates annual adjustments from the baseline 

year (rather than from the prior-year total 

consolidated asset threshold) to ensure that the 

adjusted total consolidated asset threshold 

accurately reflects the cumulative change in the 

BEA’s most recent estimates of the Gross Domestic 

Product Price Index. 

10See 12 CFR 209.4(f) and n. 8 and accompanying 

text, supra. 

11 5 U.S.C. 603 and 604. 

12 44 U.S.C. 3506; 5 CFR part 1320. 

assets,’’ 5 (2) incorporating the statutory 

dividend rates for Reserve Bank 

stockholders 6 and (3) providing that the 

Board shall adjust the threshold for total 

consolidated assets annually to reflect 

the change in the Gross Domestic 

Product Price Index.7 The Board has 

explained that it ‘‘expects to make this 

adjustment [to the threshold for total 

consolidated assets] using the final 

second quarter estimate of the Gross 

Domestic Product Price Index for each 

year, published by the Bureau of 

Economic Analysis.’’ 8

II. Adjustment 

The Board annually adjusts the $10 

billion total consolidated asset 

threshold based on the change in the 

Gross Domestic Product Price Index 

between the second quarter of 2015 (the 

baseline year) and the second quarter of 

the current year.9 The second quarter 

2023 Gross Domestic Product Price 

Index estimate published by the BEA in 

September 2023 (121.789) is 25.17 

percent higher than the second quarter 

2015 Gross Domestic Product Price 

Index estimate published by the BEA in 

September 2023 (97.302). Based on this 

change in the Gross Domestic Product 

Price Index, the threshold for total 

consolidated assets in Regulation I will 

be $12,517,000,000 as of January 1, 

2024. 

III. Administrative Law Matters 

Administrative Procedure Act 

The provisions of 5 U.S.C. 553(b) 

relating to notice of proposed 

rulemaking have not been followed in 

connection with the adoption of these 

amendments. The amendments involve 

expected, ministerial adjustments that 

are required by statute and Regulation I 

and are consistent with a method 

previously set forth by the Board.10

Accordingly, the Board finds good cause 

for determining, and so determines, that 

notice in accordance with 5 U.S.C. 

553(b) is unnecessary. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

does not apply to a rulemaking where a 

general notice of proposed rulemaking 

is not required.11 As noted previously, 

the Board has determined that it is 

unnecessary to publish a general notice 

of proposed rulemaking for this final 

rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995,12 the Board has 

reviewed this final rule. No collections 

of information pursuant to the 

Paperwork Reduction Act are contained 

in the final rule. 

List of Subjects in 12 CFR Part 209 

Banks and banking, Federal Reserve 

System, Reporting and recordkeeping 

requirements, Securities. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Board amends Regulation 

I, 12 CFR part 209, as follows: 

PART 209—ISSUE AND 

CANCELLATION OF FEDERAL 

RESERVE BANK CAPITAL STOCK 

(REGULATION I) 

■ 1. The authority citation for part 209 

continues to read as follows: 

Authority: 12 U.S.C. 12 U.S.C. 222, 248, 

282, 286–288, 289, 321, 323, 327–328, and 

466. 

■ 2. In part 209, remove all references to 

‘‘$12,124,000,000’’ and add in their 

place wherever they appear 

‘‘$12,517,000,000’’. 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

Secretary of the Board under delegated 

authority. 

Ann E. Misback, 

Secretary of the Board. 

[FR Doc. 2023–26213 Filed 11–28–23; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 213 

[Docket No. R–1821] 

RIN 7100–AG70 

CONSUMER FINANCIAL PROTECTION 

BUREAU 

12 CFR Part 1013 

Consumer Leasing (Regulation M) 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Consumer Financial Protection Bureau 

(Bureau). 

ACTION: Final rules, official 

interpretations, and commentary. 

SUMMARY: The Board and the Bureau 

(collectively, the Agencies) are 

finalizing amendments to the official 

interpretations and commentary for the 

Agencies’ regulations that implement 

the Consumer Leasing Act (CLA). The 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank 

Act) amended the CLA by requiring that 

the dollar threshold for exempt 

consumer leases be adjusted annually 

by the annual percentage increase in the 

Consumer Price Index for Urban Wage 

Earners and Clerical Workers (CPI–W). 

Under regulations adopted by the 

Agencies, if there is no annual 

percentage increase in the CPI–W, the 

Agencies will not adjust this exemption 

threshold from the prior year. 

Additionally, in years following a year 

in which the exemption threshold was 

not adjusted because the CPI–W 

decreased, the threshold is calculated by 

applying the annual percentage change 

in the CPI–W to the dollar amount that 

would have resulted, after rounding, if 

the decreases and any subsequent 

increases in the CPI–W had been taken 

into account. Based on the annual 

percentage increase in the CPI–W as of 

June 1, 2023, the exemption threshold 

will increase from $66,400 to $69,500 

effective January 1, 2024. Because the 

Dodd-Frank Act also requires similar 

adjustments in the Truth in Lending 

Act’s threshold for exempt consumer 

credit transactions, the Agencies are 

making similar amendments to each of 

their respective regulations 

implementing the Truth in Lending Act 

elsewhere in the Rules section of this 

issue of the Federal Register. 

DATES: This final rule is effective 

January 1, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Board: Vivian W. Wong, Senior 

Counsel, Division of Consumer and 

Community Affairs, Board of Governors 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83319 

1Although consumer credit transactions above 

the threshold are generally exempt, loans secured 

by real property or by personal property used or 

expected to be used as the principal dwelling of a 

consumer and private education loans are covered 

by TILA regardless of the loan amount. See 12 CFR 

226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i) 

(Bureau). 

2Public Law 111–203, section 1100E, 124 Stat. 

1376, 2111 (2010). 

3 Id. 

4 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 

4, 2011). 

5See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323 

(Apr. 28, 2016). 

6Section 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) (Bureau). 

8See comments 2(e)–9 in Supplements I of 12 

CFR parts 213 and 1013. 

9See 81 FR 86256 (Nov. 30, 2016). 

10The Bureau of Labor Statistics calculates 

consumer-based indices for each month but does 

not report those indices until the middle of the 

following month. As such, the most recently 

reported indices as of June 1, 2023, were reported 

on May 10, 2023, and reflect economic conditions 

in April 2023. 

11 5 U.S.C. 553(b)(B). 

of the Federal Reserve System, at (202) 

452–3667. For users of TTY–TRS, please 

call 711 from any telephone, anywhere 

in the United States. 

Bureau: Anna Boadwee and Adrien 

Fernandez, Attorney-Advisors, Office of 

Regulations, Consumer Financial 

Protection Bureau, at (202) 435–7700. If 

you require this document in an 

alternative electronic format, please 

contact CFPB_Accessibility@cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Act increased the 

threshold in the CLA for exempt 

consumer leases, and the threshold in 

the Truth in Lending Act (TILA) for 

exempt consumer credit transactions,1

from $25,000 to $50,000, effective July 

21, 2011.2 In addition, the Dodd-Frank 

Act requires that, on and after December 

31, 2011, these thresholds be adjusted 

annually for inflation by the annual 

percentage increase in the CPI–W, as 

published by the Bureau of Labor 

Statistics.3 In April 2011, the Board 

issued a final rule amending Regulation 

M (which implements the CLA) 

consistent with these provisions of the 

Dodd-Frank Act, along with a similar 

final rule amending Regulation Z 

(which implements TILA) (collectively, 

the Board Final Threshold Rules).4

Title X of the Dodd-Frank Act 

transferred rulemaking authority for a 

number of consumer financial 

protection laws from the Board to the 

Bureau, effective July 21, 2011. In 

connection with this transfer of 

rulemaking authority, the Bureau issued 

its own Regulation M implementing the 

CLA, 12 CFR part 1013, substantially 

duplicating the Board’s Regulation M.5

Although the Bureau has the authority 

to issue rules to implement the CLA for 

most entities, the Board retains 

authority to issue rules under the CLA 

for certain motor vehicle dealers 

covered by section 1029(a) of the DoddFrank Act, and the Board’s Regulation 

M continues to apply to those entities.6

The Agencies’ regulations,7 and their 

accompanying commentaries, provide 

that the exemption threshold will be 

adjusted annually effective January 1 of 

each year based on any annual 

percentage increase in the CPI–W that 

was in effect on the preceding June 1. 

They further provide that any increase 

in the threshold amount will be 

rounded to the nearest $100 increment. 

For example, if the annual percentage 

increase in the CPI–W would result in 

a $950 increase in the threshold 

amount, the threshold amount will be 

increased by $1,000. However, if the 

annual percentage increase in the CPI– 

W would result in a $949 increase in the 

threshold amount, the threshold amount 

will be increased by $900.8 Since 2011, 

the Agencies have adjusted the 

Regulation M exemption threshold 

annually, in accordance with these 

rules. 

On November 30, 2016, the Agencies 

published a final rule in the Federal 

Register to memorialize the calculation 

method used by the Agencies each year 

to adjust the exemption threshold to 

ensure that, as contemplated by section 

1100E(b) of the Dodd-Frank Act, the 

values for the exemption threshold keep 

pace with the CPI–W (Regulation M 

Adjustment Calculation Rule).9 The 

Regulation M Adjustment Calculation 

Rule memorialized the policy that, if 

there is no annual percentage increase 

in the CPI–W, the Agencies will not 

adjust the exemption threshold from the 

prior year. The Regulation M 

Adjustment Calculation Rule also 

provided that, in years following a year 

in which the exemption threshold was 

not adjusted because there was a 

decrease in the CPI–W from the 

previous year, the threshold is 

calculated by applying the annual 

percentage change in the CPI–W to the 

dollar amount that would have resulted, 

after rounding, if the decreases and any 

subsequent increases in the CPI–W had 

been taken into account. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly; if the resulting amount 

calculated, after rounding, is equal to or 

less than the current threshold, then the 

threshold effective January 1 the 

following year will not change, but 

future increases will be calculated based 

on the amount that would have resulted, 

after rounding. 

II. 2024 Adjustment and Commentary 

Revision 

Effective January 1, 2024, the 

exemption threshold amount is 

increased from $66,400 to $69,500. This 

amount is based on the CPI–W in effect 

on June 1, 2023, which was reported on 

May 10, 2023 (based on April 2023 

data).10 The CPI–W is a subset of the 

CPI–U index (based on all urban 

consumers) and represents 

approximately 30 percent of the U.S. 

population. The CPI–W reported on 

May 10, 2023, reflects a 4.6 percent 

increase in the CPI–W from April 2022 

to April 2023. Accordingly, the 4.6 

percent increase in the CPI–W from 

April 2022 to April 2023 results in an 

exemption threshold amount of $69,500, 

after rounding. The Agencies are 

revising the commentaries to their 

respective regulations to add new 

comment 2(e)–11.xv to state that, from 

January 1, 2024, through December 31, 

2024, the threshold amount is $69,500. 

These revisions are effective January 1, 

2024. 

III. Regulatory Analysis 

Administrative Procedure Act 

Under the Administrative Procedure 

Act, notice and opportunity for public 

comment are not required if the 

Agencies find that notice and public 

comment are impracticable, 

unnecessary, or contrary to the public 

interest.11 The amendments in this rule 

are technical and apply the method 

previously set forth in the Board Final 

Threshold Rules and the Regulation M 

Adjustment Calculation Rule. For these 

reasons, the Agencies have determined 


ddrumheller on DSK120RN23PROD with RULES1
83320 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

12 5 U.S.C. 603(a) and 604(a). 

13 44 U.S.C. 3506; 5 CFR part 1320. 

that publishing a notice of proposed 

rulemaking and providing opportunity 

for public comment are unnecessary. 

Therefore, the amendments are adopted 

in final form. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

does not apply to a rulemaking where a 

general notice of proposed rulemaking 

is not required.12 As noted previously, 

the Agencies have determined that it is 

unnecessary to publish a general notice 

of proposed rulemaking for this joint 

final rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

The information collections contained 

in Regulation Z which implements TILA 

are approved by OMB under Control 

number 3170–0006. The current 

approval for this control number expires 

on October 31, 2025. In accordance with 

the Paperwork Reduction Act of 1995,13

the Agencies reviewed this final rule. 

The Agencies have determined that this 

rule does not create any new 

information collections or substantially 

revise any existing collections. 

Bureau Congressional Review Act 

Statement 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Bureau 

will submit a report containing this rule 

and other required information to the 

U.S. Senate, the U.S. House of 

Representatives, and the Comptroller 

General of the United States prior to the 

rule taking effect. The Office of 

Information and Regulatory Affairs has 

designated this rule as not a ‘‘major 

rule’’ as defined by 5 U.S.C. 804(2). 

List of Subjects 

12 CFR Part 213 

Advertising, Consumer leasing, 

Consumer protection, Federal Reserve 

System, Reporting and recordkeeping 

requirements. 

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: 

Authority: 15 U.S.C. 1604 and 1667f; Pub. 

L. 111–203 section 1100E, 124 Stat. 1376. 

■ 2. In Supplement I to Part 213, under 

Section 213.2—Definitions, revise 2(e) 

Consumer Lease, as follows: 

Supplement I to Part 213—Official Staff 

Interpretations 

* * * * * 

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 § 213.4(e). 

The total contractual obligation includes 

nonrefundable amounts a lessee is 

contractually obligated to pay to the 

lessor, but excludes items such as: 

i. Residual value amounts or 

purchase-option prices; 

ii. Amounts collected by the lessor 

but paid to a third party, such as taxes, 

licenses, and registration fees. 

4. Credit sale. The regulation does not 

cover a lease that meets the definition 

of a credit sale in Regulation Z, 12 CFR 

226.2(a)(16), which is defined, in part, 

as a bailment or lease (unless terminable 

without penalty at any time by the 

consumer) under which the consumer: 

i. Agrees to pay as compensation for 

use a sum substantially equivalent to, or 

in excess of, the total value of the 

property and services involved; and 

ii. Will become (or has the option to 

become), for no additional consideration 

or for nominal consideration, the owner 

of the property upon compliance with 

the agreement. 

5. Agricultural purpose. Agricultural 

purpose means a purpose related to the 

production, harvest, exhibition, 

marketing, transportation, processing, or 

manufacture of agricultural products by 

a natural person who cultivates, plants, 

propagates, or nurtures those 

agricultural products, including but not 

limited to the acquisition of personal 

property and services used primarily in 

farming. Agricultural products include 

horticultural, viticultural, and dairy 

products, livestock, wildlife, poultry, 

bees, forest products, fish and shellfish, 

and any products thereof, including 

processed and manufactured products, 

and any and all products raised or 

produced on farms and any processed or 

manufactured products thereof. 

6. Organization or other entity. A 

consumer lease does not include a lease 

made to an organization such as a 

corporation or a government agency or 

instrumentality. Such a lease is not 

covered by the regulation even if the 

leased property is used (by an 

employee, for example) primarily for 

personal, family or household purposes, 

or is guaranteed by or subsequently 

assigned to a natural person. 

7. Leases of personal property 

incidental to a service. The following 

leases of personal property are deemed 

incidental to a service and thus are not 

subject to the regulation: 

i. Home entertainment systems 

requiring the consumer to lease 

equipment that enables a television to 

receive the transmitted programming. 

ii. Security alarm systems requiring 

the installation of leased equipment 

intended to monitor unlawful entries 

into a home and in some cases to 

provide fire protection. 

iii. Propane gas service where the 

consumer must lease a propane tank to 

receive the service. 

8. Safe deposit boxes. The lease of a 

safe deposit box is not a consumer lease 

under § 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. 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83321 

The threshold amount in effect during a 

particular time period is the amount 

stated in comment 2(e)–11 for that 

period. The threshold amount is 

adjusted effective January 1 of each year 

by any annual percentage increase in 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W) that was in effect on the 

preceding June 1. Comment 2(e)–11 will 

be amended to provide the threshold 

amount for the upcoming year after the 

annual percentage change in the CPI–W 

that was in effect on June 1 becomes 

available. Any increase in the threshold 

amount will be rounded to the nearest 

$100 increment. For example, if the 

annual percentage increase in the CPI– 

W would result in a $950 increase in the 

threshold amount, the threshold amount 

will be increased by $1,000. However, if 

the annual percentage increase in the 

CPI–W would result in a $949 increase 

in the threshold amount, the threshold 

amount will be increased by $900. If a 

consumer lease is exempt from the 

requirements of this part because the 

total contractual obligation exceeds the 

threshold amount in effect at the time of 

consummation, the lease remains 

exempt regardless of a subsequent 

increase in the threshold amount. 

10. No increase in the CPI–W. If the 

CPI–W in effect on June 1 does not 

increase from the CPI–W in effect on 

June 1 of the previous year, the 

threshold amount effective the 

following January 1 through December 

31 will not change from the previous 

year. When this occurs, for the years 

that follow, the threshold is calculated 

based on the annual percentage change 

in the CPI–W applied to the dollar 

amount that would have resulted, after 

rounding, if decreases and any 

subsequent increases in the CPI–W had 

been taken into account. 

i. Net increases. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly. 

ii. Net decreases. If the resulting 

amount calculated, after rounding, is 

equal to or less than the current 

threshold, then the threshold effective 

January 1 the following year will not 

change, but future increases will be 

calculated based on the amount that 

would have resulted. 

11. Threshold. For purposes of 

§ 213.2(e)(1), the threshold amount in 

effect during a particular period is the 

amount stated below for that period. 

i. Prior to July 21, 2011, the threshold 

amount is $25,000. 

ii. From July 21, 2011, through 

December 31, 2011, the threshold 

amount is $50,000. 

iii. From January 1, 2012, through 

December 31, 2012, the threshold 

amount is $51,800. 

iv. From January 1, 2013, through 

December 31, 2013, the threshold 

amount is $53,000. 

v. From January 1, 2014, through 

December 31, 2014, the threshold 

amount is $53,500. 

vi. From January 1, 2015, through 

December 31, 2015, the threshold 

amount is $54,600. 

vii. From January 1, 2016, through 

December 31, 2016, the threshold 

amount is $54,600. 

viii. From January 1, 2017, through 

December 31, 2017, the threshold 

amount is $54,600. 

ix. From January 1, 2018, through 

December 31, 2018, the threshold 

amount is $55,800. 

x. From January 1, 2019, through 

December 31, 2019, the threshold 

amount is $57,200. 

xi. From January 1, 2020, through 

December 31, 2020, the threshold 

amount is $58,300. 

xii. From January 1, 2021, through 

December 31, 2021, the threshold 

amount is $58,300. 

xiii. From January 1, 2022, through 

December 31, 2022, the threshold 

amount is $61,000. 

xiv. From January 1, 2023, through 

December 31, 2023, the threshold 

amount is $66,400. 

xv. From January 1, 2024, through 

December 31, 2024, the threshold 

amount is $69,500. 

* * * * * 

CONSUMER FINANCIAL 

PROTECTION BUREAU 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Bureau amends 

Regulation M, 12 CFR part 1013, as set 

forth below: 

PART 1013—CONSUMER LEASING 

(REGULATION M) 

■ 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 to the 

primary purpose for a lease, the fact that 

a lessor gives disclosures is not 

controlling on the question of whether 

the transaction is covered. The primary 

purpose of a lease is determined before 

or at consummation and a lessor need 

not provide Regulation M disclosures 

where there is a subsequent change in 

the primary use. 

2. Period of time. To be a consumer 

lease, the initial term of the lease must 

be more than four months. Thus, a lease 

of personal property for four months, 

three months or on a month-to-month or 

week-to-week basis (even though the 

lease actually extends beyond four 

months) is not a consumer lease and is 

not subject to the disclosure 

requirements of the regulation. 

However, a lease that imposes a penalty 

for not continuing the lease beyond four 

months is considered to have a term of 

more than four months. To illustrate: 

i. A three-month lease extended on a 

month-to-month basis and terminated 

after one year is not subject to the 

regulation. 

ii. A month-to-month lease with a 

penalty, such as the forfeiture of a 

security deposit for terminating before 

one year, is subject to the regulation. 

3. Total contractual obligation. The 

total contractual obligation is not 

necessarily the same as the total of 

payments disclosed under § 1013.4(e). 

The total contractual obligation includes 

nonrefundable amounts a lessee is 

contractually obligated to pay to the 

lessor, but excludes items such as: 

i. Residual value amounts or 

purchase-option prices; 

ii. Amounts collected by the lessor 

but paid to a third party, such as taxes, 

licenses, and registration fees. 

4. Credit sale. The regulation does not 

cover a lease that meets the definition 

of a credit sale in Regulation Z, 12 CFR 

226.2(a)(16), which is defined, in part, 

as a bailment or lease (unless terminable 

without penalty at any time by the 

consumer) under which the consumer: 

i. Agrees to pay as compensation for 

use a sum substantially equivalent to, or 

in excess of, the total value of the 

property and services involved; and 

ii. Will become (or has the option to 

become), for no additional consideration 

or for nominal consideration, the owner 

of the property upon compliance with 

the agreement. 


ddrumheller on DSK120RN23PROD with RULES1
83322 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

5. Agricultural purpose. Agricultural 

purpose means a purpose related to the 

production, harvest, exhibition, 

marketing, transportation, processing, or 

manufacture of agricultural products by 

a natural person who cultivates, plants, 

propagates, or nurtures those 

agricultural products, including but not 

limited to the acquisition of personal 

property and services used primarily in 

farming. Agricultural products include 

horticultural, viticultural, and dairy 

products, livestock, wildlife, poultry, 

bees, forest products, fish and shellfish, 

and any products thereof, including 

processed and manufactured products, 

and any and all products raised or 

produced on farms and any processed or 

manufactured products thereof. 

6. Organization or other entity. A 

consumer lease does not include a lease 

made to an organization such as a 

corporation or a government agency or 

instrumentality. Such a lease is not 

covered by the regulation even if the 

leased property is used (by an 

employee, for example) primarily for 

personal, family or household purposes, 

or is guaranteed by or subsequently 

assigned to a natural person. 

7. Leases of personal property 

incidental to a service. The following 

leases of personal property are deemed 

incidental to a service and thus are not 

subject to the regulation: 

i. Home entertainment systems 

requiring the consumer to lease 

equipment that enables a television to 

receive the transmitted programming. 

ii. Security alarm systems requiring 

the installation of leased equipment 

intended to monitor unlawful entries 

into a home and in some cases to 

provide fire protection. 

iii. Propane gas service where the 

consumer must lease a propane tank to 

receive the service. 

8. Safe deposit boxes. The lease of a 

safe deposit box is not a consumer lease 

under § 1013.2(e). 

9. Threshold amount. A consumer 

lease is exempt from the requirements of 

this part if the total contractual 

obligation exceeds the threshold amount 

in effect at the time of consummation. 

The threshold amount in effect during a 

particular time period is the amount 

stated in comment 2(e)–11 for that 

period. The threshold amount is 

adjusted effective January 1 of each year 

by any annual percentage increase in 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W) that was in effect on the 

preceding June 1. Comment 2(e)–11 will 

be amended to provide the threshold 

amount for the upcoming year after the 

annual percentage change in the CPI–W 

that was in effect on June 1 becomes 

available. Any increase in the threshold 

amount will be rounded to the nearest 

$100 increment. For example, if the 

annual percentage increase in the CPI– 

W would result in a $950 increase in the 

threshold amount, the threshold amount 

will be increased by $1,000. However, if 

the annual percentage increase in the 

CPI–W would result in a $949 increase 

in the threshold amount, the threshold 

amount will be increased by $900. If a 

consumer lease is exempt from the 

requirements of this part because the 

total contractual obligation exceeds the 

threshold amount in effect at the time of 

consummation, the lease remains 

exempt regardless of a subsequent 

increase in the threshold amount. 

10. No increase in the CPI–W. If the 

CPI–W in effect on June 1 does not 

increase from the CPI–W in effect on 

June 1 of the previous year, the 

threshold amount effective the 

following January 1 through December 

31 will not change from the previous 

year. When this occurs, for the years 

that follow, the threshold is calculated 

based on the annual percentage change 

in the CPI–W applied to the dollar 

amount that would have resulted, after 

rounding, if decreases and any 

subsequent increases in the CPI–W had 

been taken into account. 

i. Net increases. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly. 

ii. Net decreases. If the resulting 

amount calculated, after rounding, is 

equal to or less than the current 

threshold, then the threshold effective 

January 1 the following year will not 

change, but future increases will be 

calculated based on the amount that 

would have resulted. 

11. Threshold. For purposes of 

§ 1013.2(e)(1), the threshold amount in 

effect during a particular period is the 

amount stated below for that period. 

i. Prior to July 21, 2011, the threshold 

amount is $25,000. 

ii. From July 21, 2011, through 

December 31, 2011, the threshold 

amount is $50,000. 

iii. From January 1, 2012, through 

December 31, 2012, the threshold 

amount is $51,800. 

iv. From January 1, 2013, through 

December 31, 2013, the threshold 

amount is $53,000. 

v. From January 1, 2014, through 

December 31, 2014, the threshold 

amount is $53,500. 

vi. From January 1, 2015, through 

December 31, 2015, the threshold 

amount is $54,600. 

vii. From January 1, 2016, through 

December 31, 2016, the threshold 

amount is $54,600. 

viii. From January 1, 2017, through 

December 31, 2017, the threshold 

amount is $54,600. 

ix. From January 1, 2018, through 

December 31, 2018, the threshold 

amount is $55,800. 

x. From January 1, 2019, through 

December 31, 2019, the threshold 

amount is $57,200. 

xi. From January 1, 2020, through 

December 31, 2020, the threshold 

amount is $58,300. 

xii. From January 1, 2021, through 

December 31, 2021, the threshold 

amount is $58,300. 

xiii. From January 1, 2022, through 

December 31, 2022, the threshold 

amount is $61,000. 

xiv. From January 1, 2023, through 

December 31, 2023, the threshold 

amount is $66,400. 

xv. From January 1, 2024, through 

December 31, 2024, the threshold 

amount is $69,500. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

Secretary of the Board under delegated 

authority. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

Brian Shearer, 

Senior Advisor, Consumer Financial 

Protection Bureau. 

[FR Doc. 2023–25049 Filed 11–28–23; 8:45 am] 

BILLING CODE 4810–AM–P; 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 226 

[Docket No. R–1820] 

RIN 7100–AG69 

CONSUMER FINANCIAL PROTECTION 

BUREAU 

12 CFR Part 1026 

Truth in Lending (Regulation Z) 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Consumer Financial Protection Bureau 

(Bureau). 

ACTION: Final rules, official 

interpretations, and commentary. 

SUMMARY: The Board and the Bureau 

(collectively, the Agencies) are 

publishing final rules amending the 

official interpretations and commentary 

for the Agencies’ regulations that 

implement the Truth in Lending Act 

(TILA). The Dodd-Frank Wall Street 


ddrumheller on DSK120RN23PROD with RULES1