I

107TH CONGRESS

1ST SESSION H. R. 1056

To amend the Consumer Credit Protection Act to enhance the advertising

of the terms and costs of consumer automobile leases, to permit consumer

comparison of advertised lease offerings, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 15, 2001

Mr. LAFALCE (for himself, Mr. GUTIERREZ, Ms. LEE, Mrs. JONES of Ohio,

Mr. CAPUANO, Mr. CLAY, Mr. HINCHEY, and Ms. SCHAKOWSKY) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To amend the Consumer Credit Protection Act to enhance

the advertising of the terms and costs of consumer automobile leases, to permit consumer comparison of advertised lease offerings, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Consumer Automobile Lease Advertising Improvement

6 Act of 2001’’.
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1 (b) REFERENCE.—Whenever in this Act an amend2 ment or repeal is expressed in terms of an amendment

3 to, or repeal of, a section or other provision, the reference

4 shall be considered to be made to a section or other provi5 sion of the Consumer Credit Protection Act.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds the following:

8 (1) There has been a continuing trend toward

9 leasing of automobiles by consumers as an alter10 native to installment credit sales, with automobile

11 leases now constituting over one-third of all new

12 automobile transactions.

13 (2) Current automobile leasing practices do not

14 provide consumers with consistent or adequate infor15 mation to permit comparison shopping among lease

16 offerings. Important information about lease costs

17 and terms are not available until the consumer visits

18 an automobile dealership, are typically provided only

19 as part of lease negotiations, and often are not fully

20 disclosed until the signing of the lease documents.

21 (3) Automobile lease advertisements tend to

22 confuse and mislead consumers by highlighting the

23 most attractive terms of leases, by minimizing or

24 omitting additional costs, terms or penalties, and by

25 advertising monthly payment amounts based on
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1 lease terms that are different from those customarily

2 offered to or selected by consumers.

3 (4) With leases accounting for a large and

4 growing percentage of all new automobile trans5 actions, there is increasing need for automobile man6 ufacturers, automobile dealers and other firms in7 volved in leasing to provide more relevant and easily

8 understood information in advertising and in writing

9 at the auto dealership to permit consumers to evalu10 ate intelligently the attractiveness of leases offered

11 by an automobile dealership, to compare terms of

12 leases offered and advertised by competing dealer13 ships, and to compare the benefits of automobile

14 leases with alternative purchase transactions.

15 (b) PURPOSE.—The purpose of the amendments

16 made by this Act is to provide consumers with more rel17 evant and easily understood information regarding the

18 terms and costs of lease offerings earlier in the leasing

19 process to permit consumers to compare lease and pur20 chase options and to comparison shop among competing

21 lease opportunities.

22 SEC. 3. APPLICABLE CONSUMER LEASES.

23 Section 181(1) of the Consumer Credit Protection

24 Act (15 U.S.C. 1667(1)) is amended—
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1 (1) by striking ‘‘$25,000’’ and inserting

2 ‘‘$75,000’’; and

3 (2) by adding at the end the following: ‘‘The

4 limit on the contractual obligation which comes with5 in such term shall be adjusted annually based upon

6 the change reported in the Consumer Price Index by

7 the Department of Labor in June of the preceding

8 year.’’.

9 SEC. 4. GENERAL LEASE ADVERTISING.

10 (a) AMENDMENTS.—Section 184(a) (15 U.S.C.

11 1667c) is amended—

12 (1) by striking ‘‘(a)’’ and inserting ‘‘(a)(1)’’;

13 (2) by redesignating paragraphs (1) through

14 (5) as subparagraphs (A) through (E), respectively;

15 (3) by adding at the end the following:

16 ‘‘(2) Identification in a television advertisement

17 of the advertised transaction as a lease, as required

18 by paragraph (1)(A), shall be included in both the

19 audio and video portions of the television advertise20 ment.

21 ‘‘(3) The requirements of this subsection shall

22 apply to all advertisements for a consumer lease, in23 cluding advertisements on television, radio and vid24 eotape; print advertisements in publications, news25 letters and fliers; advertisements by toll-free tele-
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1 phone numbers; and advertisements in electronic

2 media, including Internet web pages, e-mail, CD–

3 ROMs and interactive computer services.’’.

4 (b) CONFORMING AMENDMENTS.—Section 184(c)

5 (15 U.S.C. 1667c(c)) is amended by striking ‘‘subsection

6 (a)’’ each time it occurs and inserting ‘‘subsection (a)(1)’’

7 and in paragraph (1) by striking ‘‘paragraphs (1) and

8 (2)’’ and inserting ‘‘subparagraphs (A) and (B)’’.

9 SEC. 5. ADVERTISEMENT FOR AUTOMOBILE LEASE.

10 Section 184 (15 U.S.C. 1667c) is amended by adding

11 at the end the following new subsection:

12 ‘‘(d) ADVERTISEMENT FOR AUTOMOBILE LEASE.—

13 ‘‘(1) IN GENERAL.—An advertisement to pro14 mote a lease for an automobile that includes a

15 scheduled lease payment amount that applies only to

16 a single vehicle, or to a limited number of vehicles

17 of the same vehicle make, model and year, shall

18 clearly and conspicuously state that the advertised

19 payment amount applies only to a single vehicle, or

20 shall clearly and conspicuously state the number of

21 vehicles of the same vehicle make and model to be

22 made available for lease at the advertised payment

23 amount.

24 ‘‘(2) LEASE PAYMENT AMOUNTS.—
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1 ‘‘(A) An advertisement to promote a lease

2 for an automobile that states a lease payment

3 amount, or must state a lease payment amount

4 under subsection (a)(1)(D), shall calculate such

5 payment amount on the basis of a lease pay6 ment formula which the Board shall set forth in

7 regulation and which shall be based on the fol8 lowing information—

9 ‘‘(i) the total capitalized cost of the

10 vehicle model advertised, which shall not be

11 reduced or adjusted by any down payment

12 amount, capitalized cost reduction, vehicle

13 trade-in amount or other required pay14 ment;

15 ‘‘(ii) a lease term of twenty-four (24)

16 months, or such other lease term that the

17 Board may determine in regulation as rep18 resentative of prevailing industry practice;

19 and

20 ‘‘(iii) a mileage allowance before any

21 excess mileage charge may be imposed of

22 12,000 miles for each year of the lease

23 term, or such other annual mileage allow24 ance which the Board may determine in

25 regulation as providing a more representa-
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1 tive estimate of vehicle use and potential

2 costs to the consumer.

3 ‘‘(B) An advertisement to promote a lease

4 for an automobile that states a lease payment

5 for a vehicle model as provided under subpara6 graph (A) may state a lease payment amount

7 for the same vehicle model that is different

8 than that required to be stated under subpara9 graph (A), except that—

10 ‘‘(i) the lease payment amount is not

11 presented more prominently than the lease

12 payment amount required to be stated

13 under subparagraph (A); and

14 ‘‘(ii) the advertisement clearly and

15 conspicuously identifies the lease terms or

16 payment amounts that explain the dif17 ference between the lease payment amount

18 and the payment amount required to be

19 stated under subparagraph (A).’’.

20 SEC. 6. AVAILABILITY OF LEASE INFORMATION.

21 Section 184 (15 U.S.C. 1667c) is amended by insert22 ing after subsection (d) (as added by section 5) the fol23 lowing new subsection:

24 ‘‘(e) AVAILABILITY OF INFORMATION.—An auto25 mobile dealer that engages in any advertising to promote
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1 or assist a consumer lease, or that participates in any ad2 vertised national or regional promotion for a consumer

3 lease, shall make available to the public, as appropriate

4 and in such format as the Board shall determine in regula5 tion, the following information:

6 ‘‘(1) CUSTOMER INCENTIVES.—A written and

7 dated statement that shall be placed in a con8 spicuous and prominent location in the dealership

9 that sets out clearly and accurately for each vehicle

10 model offered by the dealer, as applicable, the incen11 tives, special offers or promotions available for the

12 benefit of consumers in conjunction with consumer

13 lease, purchase and installment credit transactions,

14 that shall include—

15 ‘‘(A) special interest rates that are offered

16 by automobile manufacturers, financial institu17 tions and leasing companies;

18 ‘‘(B) special incentives, including cash re19 bates and vehicle residual percentages that are

20 offered by automobile manufacturers directly to

21 consumers; and

22 ‘‘(C) special incentives and lease terms, in23 cluding vehicle discounts, residual value per24 centages and other vehicle promotions that are

25 offered to consumers by the dealer.
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1 ‘‘(2) AVAILABLE LEASES.—A written and dated

2 statement for each vehicle model that the dealer

3 makes available for lease to consumers that shall be

4 placed in a conspicuous and prominent location in

5 the dealership, and copies of which shall be made

6 available to individual consumers upon request, that

7 sets out clearly and accurately the following terms

8 applicable to leases for such vehicle models—

9 ‘‘(A) the rebates and other incentives avail10 able for consumers;

11 ‘‘(B) the money factor, or lease interest

12 factor, that shall be stated as a decimal number

13 and as an equivalent approximate annual per14 centage rate; and

15 ‘‘(C) the vehicle residual value, that shall

16 be stated as a percentage of the retail price

17 (MSRP) of such vehicle model.’’.

18 SEC. 7. DEFINITIONS.

19 Section 184 (15 U.S.C. 1667c) is amended by insert20 ing after subsection (e) (as added by section 6) the fol21 lowing new subsection:

22 ‘‘(f) CLEARLY AND CONSPICUOUSLY DEFINED.—

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, the term ‘clearly and conspicuously’ means—
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1 ‘‘(A) in print advertisements, the required

2 disclosures and explanations of lease terms shall

3 appear in a type size, shade, contrast, promi4 nence, and location as to be readily noticeable,

5 readable, and comprehensible to an ordinary

6 consumer;

7 ‘‘(B) in the video portion of television or

8 videotaped advertisements, the required disclo9 sures shall appear on the screen in a type size,

10 shade, contrast, prominence, and location and

11 for a duration as to be readily noticeable, read12 able, and comprehensible to an ordinary con13 sumer;

14 ‘‘(C) in the audio portion of television,

15 videotaped, and radio advertisements, the re16 quired disclosures shall be delivered in a vol17 ume, cadence, and location and for a duration

18 as to be readily noticeable, hearable, and com19 prehensible to an ordinary consumer; and

20 ‘‘(D) in promotions and advertising in

21 Internet web pages, CD–ROMs, or interactive

22 computer services, the required disclosures shall

23 appear in a type size, shade, contrast, promi24 nence, and location as to be readily readable

25 and comprehensible to users and shall be sepa-
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1 rated from marketing and promotional informa2 tion and easily accessible under the label or

3 heading ‘Important Information for Con4 sumers’.

5 ‘‘(2) LIMITATION.—Nothing contrary to, incon6 sistent with, or in mitigation of, the required disclo7 sures shall be used in any advertisement in any me8 dium and no audio, video, or print technique shall

9 be used that is likely to obscure or detract signifi10 cantly from the communication of the disclosures.’’.

11 SEC. 8. ADMINISTRATIVE ENFORCEMENT.

12 (a) IN GENERAL.—Chapter 5 of the Consumer Credit

13 Protection Act is amended by adding the following new

14 section:

15 ‘‘SEC. 188. ADMINISTRATIVE ENFORCEMENT.

16 ‘‘Compliance with section 184 of this chapter shall

17 be enforced by the Federal Trade Commission, except to

18 the extent that enforcement of the requirements imposed

19 under such section is specifically committed to another

20 agency under section 108(a) of this title. For purposes of

21 the exercise by the Commission of its functions and powers

22 under the Federal Trade Commission Act, a violation of

23 section 184 shall be deemed an unfair or deceptive act or

24 practice in violation of that Act. All of the functions of

25 and powers of the Commission under the Federal Trade
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1 Commission Act are available to the Commission to en2 force compliance by any person with such section, irrespec3 tive of whether that person is engaged in commerce or

4 meets any other jurisdictional tests in the Federal Trade

5 Commission Act, including the power to enforce the provi6 sions of such section in the same manner as if the violation

7 had been a violation of a Federal Trade Commission trade

8 regulation rule.’’.

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for chapter 5 of the Truth in Lending Act is amended

11 by adding at the end the following new item:

‘‘188. Administrative enforcement.’’

12 SEC. 9. REGULATIONS.

13 The Board of Governors of the Federal Reserve Sys14 tem, not later than 6 months after the date of the enact15 ment of this Act, shall issue regulations to implement the

16 amendments made by this Act. The Board shall also issue

17 regulations, together with staff commentary if appro18 priate, to update and clarify the requirements and defini19 tions for lease disclosures and any other issue relating to

20 consumer leasing to carry out the intent of the amend21 ments made by this Act, to implement any initiative to

22 prevent the circumvention of the amendments made by

23 this Act, and to facilitate compliance with the require24 ments in the amendments.

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