15364 Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations

provides that continuation statements

are to be treated in the same manner as

amendments to effective financing

statements. The interim rule amended

section 205.209(c) to allow the

electronic filing of amendments to

effective financing statements without

the signature of the debtor. Pursuant to

section 205.209(d), this change applies

to electronically filed continuation

statements as well. Because the purpose

of this rulemaking is to implement the

amendments to the Act, it does not

address the commentors’ request to

eliminate the signature requirement for

the paper-based continuation

statements. We plan to address this

request in a separate rulemaking.

After review of the published interim

rule and the comments received, we

have determined that the interim rule as

published at 61 FR 54727 will be

adopted as the final rule.

Compliance With Regulatory

Requirements

As set forth in the interim rule

published at 61 FR 54727, this

rulemaking was reviewed under and is

issued in conformance with Executive

Order 12866, Civil Justice Reform

(formerly Executive Order 12778, now

Executive Order 12988), and Regulatory

Flexibility Act and Information

Collection requirements. The previously

approved information collection and

recordkeeping requirements for 9 CFR

Part 205 have been previously approved

by the Office of Management and

Budget under control number 0580–

0016.

List of Subjects in 9 CFR Part 205

Agriculture, Central filing system.

PART 205—CLEAR TITLE—

PROTECTION FOR PURCHASERS OF

FARM PRODUCTS

Accordingly, the interim rule

amending 9 CFR Part 205 which was

published at 61 FR 54727 on October

22, 1996, is adopted as a final rule

without change.

Dated: March 28, 1997.

James R. Baker,

Administrator, Grain Inspection,

Packers and Stockyards Administration.

[FR Doc. 97–8093 Filed 3–31–97; 8:45 am]

BILLING CODE 3410–EN–P

FEDERAL RESERVE SYSTEM

12 CFR Part 213

[Reg. M; Docket No. R–0952]

Consumer Leasing

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final Rule.

SUMMARY: The Board is publishing

revisions to Regulation M, which

implements the Consumer Leasing Act.

The act requires lessors to provide

uniform cost and other disclosures

about consumer lease transactions. The

revisions primarily implement

amendments to the act contained in the

Economic Growth and Regulatory

Paperwork Reduction Act of 1996,

which streamline the advertising

disclosures for lease transactions. In

addition, the final rule makes the

disclosure of upfront costs in

connection with a specific lease

agreement parallel statutory changes to

the advertising rules disclosing upfront

costs—which now include total

amounts due by lease signing or

delivery, if delivery occurs later. Several

technical amendments also have been

made to the regulation.

DATES: Effective date. April 1, 1997.

Compliance date. Compliance is

optional until October 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Kyung H. Cho-Miller or Obrea O.

Poindexter, Staff Attorneys, Division of

Consumer and Community Affairs,

Board of Governors of the Federal

Reserve System, Washington, DC 20551,

at (202) 452–2412 or 452–3667. Users of

Telecommunications Device for the Deaf

only may contact Diane Jenkins, at (202)

452–3544.

SUPPLEMENTARY INFORMATION:

I. Background on the Consumer Leasing

Act and Regulation M

The Consumer Leasing Act (CLA), 15

U.S.C. 1667–1667e, was enacted into

law in 1976 as an amendment to the

Truth in Lending Act (TILA), 15 U.S.C.

1601 et seq. The CLA generally applies

to consumer leases of personal property

in which the contractual obligation does

not exceed $25,000 and has a term of

more than four months. An automobile

lease is the most common type of

consumer lease covered by the act.

Under the act, lessors are required to

provide uniform cost and other

information about consumer lease

transactions.

The Board was given rulewriting

authority, and its Regulation M (12 CFR

part 213) implements the CLA. An

official staff commentary interprets the

regulation.

The Board recently completed a

review of Regulation M, pursuant to its

policy of periodically reviewing its

regulations, and approved a final rule in

September 1996 substantially revising

the regulation to update the disclosure

requirements and to carry out more

effectively the purposes of the Act (61

FR 52246, October 7, 1996).

II. Revised Regulatory Provisions

In the September 1996 final rule, the

advertising provisions implemented

amendments to the CLA contained in

the Riegle Community Development and

Regulatory Improvement Act of 1994

(Pub. L. 103–325, 108 Stat. 2160); the

amendments allow a toll-free number or

a print advertisement to substitute for

certain lease disclosures in radio

commercials (which was expanded in

the final rule to television commercials).

The advertisement provisions were

amended and streamlined on September

30, 1996, by the Economic Growth and

Regulatory Paperwork Reduction Act of

1996 (Pub. L. 104–208, 110 Stat.

3009)(the 1996 Act). The Board issued

a proposal in December 1996 (62 FR 62,

January 2, 1997). Nineteen comments

were received. Based on the comments

and further analysis, the Board’s final

rule implements the statutory changes.

The final rule also revises the

requirement to disclose ‘‘upfront costs’’

to parallel the statutory change made to

a similar advertising disclosure—now

requiring the total amount due by lease

signing to include amounts due by

delivery, whichever occurs later. The

open- and closed-end model lease forms

have been amended to reflect this

change. This final rulemaking also

contains some technical amendments to

the regulation. For example, the model

clause for providing a description of the

leased property is added and the

example of an annual charge as an other

charge is deleted on the open- and

closed-end vehicle lease model forms.

Although a limited number of

comments were received, generally all

the commenters supported the proposed

amendments. The final rule is discussed

in detail in the section-by-section

analysis below.

III. Revisions to Regulation M

Section 213.2 Definitions

2(f) Gross Capitalized Cost

Based on comments on the proposed

revisions to the Official Staff

Commentary published in February

1997, the Board is replacing the

reference in § 213.2(f) to an outstanding

‘‘loan’’ balance with the broader term
Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations 15365

‘‘credit’’ to encompass both loan and

credit sale balances. Consistent

revisions have also been made to

§ 213.4(f)(1) and the open- and closedend vehicle lease model forms.

Section 213.4 Content of Disclosures

4(b) Amount Due at Lease Signing or

Delivery

The 1996 Act revised the advertising

disclosure of upfront fees to include

amounts due by delivery, if delivery

occurs after consummation, but the

Congress did not enact a conforming

change to the transaction disclosure.

The Board did not propose to amend

that transaction disclosure to make it

consistent with the statutory change to

the advertising rules. Several

commenters (including two Reserve

Banks, a lease trade association

representing mostly independent

lessors, and an association of state

attorneys general) urged the Board to

reconsider this issue, suggesting the

disclosure of upfront fees in advertising

and those given for specific transactions

should be consistent to avoid consumer

confusion. Major trade associations,

consumer interest representatives, and

the Federal Trade Commission,

responding to the proposed revisions to

the Official Staff Commentary, also

strongly recommended the revision.

Consumers would not normally

distinguish between charges paid at

lease signing and by delivery, if delivery

occurs later. Under the current rules any

charges payable after a lease is executed

would have to be disclosed as ‘‘other

charges.’’ A consistent rule on the

disclosure of upfront fees to include

amounts due at delivery would not

require lessors to retrain their personnel

to think of these post-consummation

fees as ‘‘other charges’’ and not ‘‘upfront

fees,’’ thus reducing the potential for

technical violations of the law that

could give rise to civil liability.

The Board believes that having a

consistent rule for the advertising and

the transaction disclosures would

benefit both consumers and lessors.

Consumers would have in one place the

total sum necessary to take possession

of the leased property, and the risk of

making technical errors would be

reduced for lessors. Pursuant to its

authority under section 105(a) of the

TILA and section 187 of the CLA, the

Board is revising the disclosure of the

total amount due at or prior to

consummation to include amounts due

at delivery, when delivery occurs after

consummation, to parallel the changes

that the Congress made to the

advertising disclosure. The open- and

closed-end vehicle lease model forms

also reflect this change. Section 105(a)

of the TILA provides that the Board’s

regulations ‘‘may contain such

classifications, differentiations, or other

provisions, and may provide for such

adjustments and exceptions for any

class of transactions, as the judgment of

the Board are necessary or proper to

effectuate the purposes of (the CLA), to

prevent circumvention or evasion

thereof, or to facilitate compliance

therewith.’’

4(f) Payment Calculation

4(f)(1) Gross Capitalized Cost

As discussed in § 213.2(f), ‘‘loan’’ is

replaced by ‘‘credit’’ in § 213.4(f)(1).

4(n) Fees and Taxes

In the September 1996 final rule,

§ 213.4(n) stated that the lessor must

disclose the total dollar amount of all

official and license fees, registration,

title, or taxes required to be paid ‘‘to the

lessor’’ in connection with the lease.

Adding ‘‘paid to the lessor’’ narrowed

the scope of the disclosure from the

previous requirement. No substantive

change to the requirement was

intended. Thus, the phrase ‘‘to the

lessor’’ has been deleted from this

section.

4(o) Insurance

The Board has revised the captions for

paragraph 4(o)(1) and (2) to change the

focus from voluntary and required

insurance. The new captions more

accurately reflect the requirement for

the insurance disclosure—that

insurance obtained through the lessor or

through a third party, regardless of

whether it is required or voluntary,

must be disclosed.

4(t) Gross Capitalized Cost and Residual

Value

The final rule required the disclosure

of the gross capitalized cost and residual

value for motor vehicle open-end leases

in place of the previous requirements to

disclose the value at consummation, the

total lease obligation, and other related

disclosures pursuant to section 182(10)

of the statute. Although such consumer

leases are extremely rare, similar

disclosures are required for non-motor

vehicle open-end leases in order to

comply with the CLA. Section 213.4(t)

includes that requirement.

Section 213.5 Renegotiations,

Extensions, and Assumptions

5(d) Exceptions

Under Regulation M, new disclosures

generally are required where a covered

lease transaction is renegotiated or

extended; however, under paragraph

5(d)(1) new disclosures are not required

if the ‘‘lease charge’’ is reduced in a

renegotiation or an extension of an

existing lease. This exception was

moved from the official staff

commentary to the regulation in the

final rule approved in September 1996.

Two commenters objected to the use of

the term ‘‘rent’’ stating that the term

implies the entire lease payment and

not a portion of the lease payment. The

Board believes that it is defined

differently by the regulation and noted

as such on the open- and closed-end

vehicle lease model forms. For clarity

and consistency in terminology

throughout the regulation, the Board has

replaced the term ‘‘lease charge’’ with

the term ‘‘rent charge.’’

Section 213.7 Advertising

Prior to the 1996 Act, the advertising

provisions required additional

disclosure if an advertisement stated

any of the following terms: the amount

of any payment; the number of required

payments; or a statement of any

capitalized cost reduction or other

payment required prior to or at

consummation, or that no payment is

required. Under the amendments to the

CLA contained in the 1996 Act, an

advertisement that states the number of

required payments would no longer

trigger additional disclosures.

The 1996 Act also makes changes in

all but one of the items that must be

disclosed when a triggering term is

stated in an advertisement, as follows:

(1) That the transaction advertised is a

lease. No change was made in this disclosure.

(2) The total amount due at lease signing,

or that no payment is required. This

disclosure has been expanded to include

amounts due at delivery if delivery occurs

after consummation. The requirement to state

that no payment is required has been

eliminated.

(3) The number, amounts, due dates or

periods of scheduled payments, and total of

such payments under the lease. The total of

scheduled payments has been eliminated as

a required disclosure.

(4) A statement of whether or not the lessee

has the option to purchase the leased

property, and where the lessee has the option

to purchase at the end of the lease term, the

purchase-option price. This disclosure has

been eliminated entirely.

(5) A statement of the amount, or the

method for determining the amount, of the

lessee’s liability (if any) at the end of the

lease term. This disclosure has been

eliminated entirely.

(6) For an open-end lease, a statement of

the lessee’s liability (if any) for the difference

between the residual value of the leased

property and its realized value at the end of

the lease term. This disclosure has been

simplified to require a short statement that an

additional charge may be imposed.
15366 Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations

The 1996 Act adds an additional

disclosure requirement: a statement of

whether or not a security deposit is

required. The final rule implements the

statutory changes.

7(b) Clear and Conspicuous Standard

7(b)(1) Amount Due at Lease Signing or

Delivery

The general rule in this paragraph

states that any reference to a charge that

is part of the total amount due at lease

signing or delivery may not be more

prominent than the disclosure of the

total amount due at lease signing or

delivery. The amount of any capitalized

cost reduction (or no capitalized cost

reduction) provided as an example of an

amount that is a part of the total amount

due at lease signing or delivery has been

deleted. The example will be included

in the Official Staff Commentary.

7(d) Advertisement of Terms That

Require Additional Disclosure

7(d)(1) Triggering Terms

Pursuant to the 1996 Act, the Board

has deleted paragraph 7(d)(1)(ii). Merely

stating in an advertisement the number

of required lease payments, for example,

‘‘36 payments,’’ no longer ‘‘triggers’’ the

additional disclosures in paragraph

7(d)(2). Paragraph 7(d)(1)(iii) has been

redesignated as paragraph 7(d)(1)(ii).

7(d)(2) Additional Terms

An advertisement stating any item

listed in paragraph 7(d)(1) is required to

state the additional disclosures in

paragraph 7(d)(2), as applicable. As

discussed previously, the 1996 Act

amends many of the required additional

disclosures in this paragraph. The

following changes implement the

statutory amendments.

The 1996 Act expands the disclosure

of the total amount due at lease signing

in paragraph 7(d)(2)(ii) to include

‘‘amounts paid at delivery, whichever

occurs later.’’ Prior to the amendments,

a delivery charge paid after

consummation was not included in the

total amount due at lease signing in

§ 213.4(b) or in this section. Under the

changes to implement the statutory

amendment, the delivery charge is

included in the total even if it is paid

after consummation.

The requirement to disclose under

paragraph 7(d)(2)(ii) that no upfront

payment is required was deleted by the

1996 Act. This requirement,

inadvertently retained in the proposal,

has been eliminated from paragraph

7(d)(2)(ii).

The total of scheduled payments

disclosure from paragraph 7(d)(2)(iii),

all of paragraph 7(d)(2)(iv), and all of

paragraph 7(d)(2)(v) have been deleted.

A statement of whether or not a security

deposit is required is added by the

statute and is contained in paragraph

7(d)(iv). For an open-end lease, the

amended statute requires a statement

that an extra charge may be imposed at

the end of the lease term; the regulatory

provision is redesignated as paragraph

7(d)(2)(v).

Few comments were received on the

statutory changes to the advertising

provisions. One commenter, however,

requested that the Board retain the

disclosure on lease end charges in

paragraph 7(d)(2)(v), based on a belief

that deletion of paragraph 7(d)(2)(v)

could lead to deceptive advertisements

where certain costs are shifted from the

beginning to the end of the lease so that

a low monthly payment or low upfront

costs can be advertised and not any

significant fee required at the end of the

lease. Although the commenter raises a

valid concern, the Board believes that

retaining paragraph 7(d)(2)(v) would not

be consistent with the congressional

intent to streamline the advertising

disclosures. Paragraph 7(d)(2)(v) is

deleted as proposed.

7(f) Alternative Disclosures—Television

or Radio Advertisements

7(f)(1) Toll-free Number or Print

Advertisement

The 1996 Act deletes the ‘‘total of

scheduled payments’’ as a required

additional disclosure under section

184(a), the general advertising

disclosures, but not for radio

advertisements. The Board proposed to

delete the requirement for radio

advertisements based on its belief that

in streamlining the advertising rules

generally the Congress did not intend to

require more disclosures for radio

advertisements than advertisements

through other media. Pursuant to the

Board’s exception authority under

section 105(a), the Board is adopting as

proposed a final rule to delete the

disclosure of the ‘‘total of scheduled

payments’’ for radio advertisements as

well.

Appendices

Lessors are required to provide a

description of leased property under the

CLA and § 213.4(a) of Regulation M. The

Board has amended the model forms for

open- and closed-end vehicle leases

disclosures to add among the

nonsegregated disclosures a model

clause for describing leased property.

The Board has amended the model

forms for open- and closed-end vehicle

leases by deleting ‘‘annual tax’’ as an

example of an other charge. Third-party

fees or charges paid to the lessor but not

retained by the lessor such as taxes are

not included in the ‘‘other charges’’

disclosure.

As discussed in § 213.2(f), ‘‘loan’’ is

replaced by ‘‘credit’’ in the disclosure of

the gross capitalized cost on the openand closed-end vehicle lease model

forms.

IV. Regulatory Flexibility Analysis

In accordance with section 3(a) of the

Regulatory Flexibility Act (5 U.S.C.

603), the Board’s Office of the Secretary

has reviewed the amendments to

Regulation M. Overall, the amendments

are not expected to have any significant

impact on small entities. The regulatory

revisions, primarily required to

implement the 1996 Act, ease

compliance by streamlining the

advertising provisions.

V. Paperwork Reduction Act

In accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C. 3506

et seq.), the Board reviewed the final

rule under the authority delegated to the

Board by the Office of Management and

Budget. 5 CFR part 1320 Appendix A.1.

The respondents are individuals or

businesses that regularly lease, offer to

lease, or arrange for the lease of personal

property under a consumer lease. The

purpose of the disclosures associated

with Regulation M is to ensure that

lessees of personal property receive

meaningful information that enables

them to compare lease terms with other

leases and, where appropriate, with

credit transactions. Records required to

evidence compliance with the

regulation must be retained for twentyfour months. The revisions to the

collection of information requirements

in this proposed rule are found in 12

CFR 213.4, 213.5, and 213.7 and

appendices A–1 and 2.

Regulation M applies to all types of

financial institutions, not just state

member banks. Under the Paperwork

Reduction Act, however, the Federal

Reserve accounts for the paperwork

burden associated with Regulation M

only for state member banks. Any

estimates of paperwork burden for

institutions other than state member

banks affected by the amendments

would be provided by the federal

agency or agencies that supervise those

lessors. The Federal Reserve has found

that few state member banks engage in

consumer leasing and that while the

prevalence of leasing has increased in

recent years, it has not increased

substantially among state member

banks. It also has found that among state

member banks that engage in consumer
Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations 15367

leasing, only a very few advertise

consumer leases.

The revisions to §§ 213.4 and 213.5

are estimated to have no effect on the

hour burden that the regulation

imposes. The revisions to § 213.7, while

more substantive, are expected to have

no net effect on the hour burden.

The current hour burden for state

member banks, as of the September

1996 final rule, is estimated to be

eighteen minutes for the disclosures and

twenty-five minutes for advertising. It is

estimated that there will be 310

respondents and an average frequency

of 120 responses per respondent each

year. The total amount of annual hour

burden at all state member banks is

estimated to be 11,179 hours. Start-up

cost burden associated with the

September 1996 final rule was estimated

to be $12,000 per respondent,

amounting to a total of $3,720,000 for

state member banks. The Federal

Reserve estimates that this amount is

sufficient to cover any costs of the final

rule. These estimates are the same as

those included in the notice of proposed

rulemaking since no comments

specifically addressing the burden

estimate were received.

The disclosures made by lessors to

consumers under Regulation M are

mandatory (15 U.S.C. 1667 et seq.).

Consumer lease information in

advertisements is available to the

public. Disclosures of the costs,

liabilities, and terms of consumer lease

transactions relating to specific leases

are not publicly available. Because the

Federal Reserve does not collect any

information, no issue of confidentiality

under the Freedom of Information Act

normally arises. If the Board were to

obtain information through examination

of a supervised institution, the

information would be kept confidential.

5 U.S.C. 552(b)(8).

An agency may not conduct or

sponsor, and an organization is not

required to respond to, this information

collection unless it displays a currently

valid OMB control number. The OMB

control number is 7100–0202.

The Federal Reserve has a continuing

interest in members of the public’s

opinions of our collections of

information. At any time, comments

regarding the burden estimate, or any

other aspect of this collection of

information, including suggestions for

reducing the burden, may be sent to:

Secretary, Board of Governors of the

Federal Reserve System, 20th and C

Streets, NW., Washington, DC 20551;

and to the Office of Management and

Budget, Paperwork Reduction Project

(7100–0202), Washington, DC 20503.

List of Subjects in 12 CFR Part 213

Advertising, Federal Reserve System,

Reporting and recordkeeping

requirements, Truth in Lending.

For the reasons set forth in the

preamble, the Board amends 12 CFR

part 213 as follows:

PART 213—CONSUMER LEASING

(REGULATION M)

1. The authority citation for part 213

continues to read as follows:

Authority: 15 U.S.C. 1604.

2. Section 213.1 is amended by

revising paragraph (a) to read as follows:

§ 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.).

Information collection requirements

contained in this regulation have been

approved by the Office of Management

and Budget under the provisions of 44

U.S.C. 3501 et seq. and have been

assigned OMB control number 7100–

0202.

* * * * *

3. Section 213.2 is amended by

revising the first sentence of paragraph

(f) to read as follows:

§ 213.2 Definitions.

* * * * *

(f) Gross capitalized cost means the

amount agreed upon by the lessor and

the lessee as the value of the leased

property and any items that are

capitalized or amortized during the

lease term, including but not limited to

taxes, insurance, service agreements,

and any outstanding prior credit or lease

balance. * * *

* * * * *

4. Section 213.4 is amended as

follows:

a. Paragraph (b) is revised;

b. Paragraph (f)(1) is revised.

c. Paragraph (n) is revised;

d. The headings of paragraphs (o)(1)

and (o)(2) are revised; and

e. New paragraph (t) is added.

The revisions and additions read as

follows:

§ 213.4 Content of disclosures.

* * * * *

(b) Amount due at lease signing or

delivery. The total amount to be paid

prior to or at consummation or by

delivery, if delivery occurs after

consummation, using the term ‘‘amount

due at lease signing or delivery.’’ The

lessor shall itemize each component by

type and amount, including any

refundable security deposit, advance

monthly or other periodic payment, and

capitalized cost reduction; and in

motor-vehicle leases, shall itemize how

the amount due will be paid, by type

and amount, including any net trade-in

allowance, rebates, noncash credits, and

cash payments in a format substantially

similar to the model forms in appendix

A of this part.

* * * * *

(f) Payment calculation. * * *

(1) Gross capitalized cost. The gross

capitalized cost, including a disclosure

of the agreed upon value of the vehicle,

a description such as ‘‘the agreed upon

value of the vehicle [state the amount]

and any items you pay for over the lease

term (such as service contracts,

insurance, and any outstanding prior

credit or lease balance),’’ and a

statement of the lessee’s option to

receive a separate written itemization of

the gross capitalized cost. If requested

by the lessee, the itemization shall be

provided before consummation.

* * * * *

(n) Fees and taxes. The total dollar

amount for all official and license fees,

registration, title, or taxes required to be

paid in connection with the lease.

(o) Insurance. * * *

(1) Through the lessor. * * *

(2) Through a third party. * * *

* * * * *

(t) Non-motor vehicle open-end

leases. Non-motor vehicle open-end

leases remain subject to section 182(10)

of the act regarding end of term liability.

5. Section 213.5 is amended by

revising paragraph (d)(1) to read as

follows:

§ 213.5 Renegotiations, extensions, and

assumptions.

* * * * *

(d) Exceptions. * * *

(1) A reduction in the rent charge;

* * * * *

6. Section 213.7 is amended as

follows:

a. Paragraph (b)(1) is revised;

b. Paragraph (d)(1)(i) is revised,

paragraph (d)(1)(ii) is removed, and

paragraph (d)(1)(iii) is redesignated as

(d)(1)(ii) and republished;

c. Paragraphs (d)(2)(ii) and (d)(2)(iii)

are revised, paragraph (d)(2)(iv) is

removed, paragraphs (d)(2)(v) and

(d)(2)(vi) are revised and redesignated as

paragraphs (d)(2)(iv) and (d)(2)(v), and

paragraph (d)(2)(i) is republished

respectively.

The revisions and republications read

as follows:
15368 Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations

§ 213.7 Advertising.

* * * * *

(b) Clear and conspicuous

standard. * * *

(1) Amount due at lease signing or

delivery. Except for the statement of a

periodic payment, any affirmative or

negative reference to a charge that is a

part of the disclosure required under

paragraph (d)(2)(ii) of this section shall

not be more prominent than that

disclosure.

* * * * *

(d) Advertisement of terms that

require additional disclosure—(1)

Triggering terms. An advertisement that

states any of the following items shall

contain the disclosures required by

paragraph (d)(2) of this section, except

as provided in paragraphs (e) and (f) of

this section:

(i) The amount of any payment; or

(ii) A statement of any capitalized cost

reduction or other payment required

prior to or at consummation or by

delivery, if delivery occurs after

consummation.

(2) Additional terms. An

advertisement stating any item listed in

paragraph (d)(1) of this section shall

also state the following items:

(i) That the transaction advertised is

a lease;

(ii) The total amount due prior to or

at consummation or by delivery, if

delivery occurs after consummation;

(iii) The number, amounts, and due

dates or periods of scheduled payments

under the lease;

(iv) A statement of whether or not a

security deposit is required; and

(v) A statement that an extra charge

may be imposed at the end of the lease

term where the lessee’s liability (if any)

is based on the difference between the

residual value of the leased property

and its realized value at the end of the

lease term.

* * * * *

7. Appendix A to part 213 is amended

by revising Appendix A–1 and

Appendix A–2 to read as follows:

BILLING CODE 6210–01–P
Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations 15369
15370 Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations
Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations 15371
15372 Federal Register / Vol. 62, No. 62 / Tuesday, April 1, 1997 / Rules and Regulations

By order of the Board of Governors of

the Federal Reserve System, March 27,

1997.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 97–8200 Filed 3–31–97; 8:45 am]

BILLING CODE 6210–01–C