I
105TH CONGRESS
2D SESSION
H. R. 4788
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
OCTOBER 10, 1998
Mr. LAFALCE introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To amend the Consumer Credit Protection Act to enhance
the advertising of the terms and costs of consumer auto-
mobile leases, to permit consumer comparison of adver-
tised lease offerings, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Consumer Automobile Lease Advertising Act of 1998’’.
(b) REFERENCE.—Whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
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shall be considered to be made to a section or other provi-
sion of the Consumer Credit Protection Act.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress finds the following:
(1) There has been a continuing trend toward
leasing of automobiles by consumers as an alter-
native to installment credit sales, with automobile
leases now constituting over one-third of all new
automobile transactions.
(2) Current automobile leasing practices do not
provide consumers with consistent or adequate infor-
mation to permit comparison shopping among lease
offerings. Important information about lease costs
and terms are not available until the consumer visits
an automobile dealership, are typically provided only
as part of lease negotiations, and often are not fully
disclosed until the signing of the lease documents.
(3) Automobile lease advertisements tend to
confuse and mislead consumers by highlighting the
most attractive terms of leases, by minimizing or
omitting additional costs, terms or penalties, and by
advertising monthly payment amounts based on
lease terms that are different from those customarily
offered to or selected by consumers.
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(4) With leases accounting for a large and
growing percentage of all new automobile trans-
actions, there is increasing need for automobile man-
ufacturers, automobile dealers and other firms in-
volved in leasing to provide more relevant and easily
understood information in advertising and in writing
at the auto dealership to permit consumers to evalu-
ate intelligently the attractiveness of leases offered
by an automobile dealership, to compare terms of
leases offered and advertised by competing dealer-
ships, and to compare the benefits of automobile
leases with alternative purchase transactions.
(b) PURPOSE.—The purpose of the amendments
made by this Act is to simplify and standardize automobile
lease advertising in order to provide consumers with more
relevant and easily understood information regarding the
terms and costs of lease offerings earlier in the leasing
process to permit consumers to compare lease and pur-
chase options and to comparison shop among competing
lease opportunities.
SEC. 3. APPLICABLE CONSUMER LEASES.
Section 181(1) of the Consumer Credit Protection
Act (15 U.S.C. 1667(1)) is amended—
(1) by striking ‘‘$25,000’’ and inserting
‘‘$50,000’’; and
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(2) by adding at the end of the following: ‘‘The
limit on the contractual obligation which comes with-
in such term shall be adjusted annually based upon
the change reported in the Consumer Price Index by
the Department of Labor in June of the preceding
year.’’.
SEC. 4. GENERAL LEASE ADVERTISING.
(a) AMENDMENTS.—Section 184(a) (15 U.S.C.
1667c) is amended—
(1) by striking ‘‘(a)’’ and inserting ‘‘(a)(1)’’;
(2) by redesignating paragraphs (1) through
(5) as subparagraphs (A) through (E), respectively;
(3) by adding at the end the following:
‘‘(2) Information required to be disclosed under
paragraph (1) shall be in the same language that
principally is used in the advertisement.
‘‘(3) Identification in a television advertisement
of the advertised transaction as a lease, as required
by paragraph (1)(A), shall be included in both the
audio and video portions of the television advertise-
ment.
‘‘(4) The requirements of this subsection shall
apply to all aspects of advertising, including tele-
vision, radio and videotaped advertisements, print
advertisements in publications, newsletters and fli-
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end of clause (iii) and inserting ‘‘; and’’, and by add-
ing after clause (iii) the following:
‘‘(iv) exclude from the information pro-
vided by such toll-free telephone all marketing
and sales promotional information.’’; and
(6) by amending paragraph (2)(B) to read as
follows:
‘‘(B) WRITTEN INFORMATION.—A toll-free
number established in accordance with subpara-
graph (A) shall include an option that permits
consumers to request the information required
to be provided under subparagraph (A)(iii) in
written form and by mail.’’.
SEC. 6. ADVERTISEMENT FOR AUTOMOBILE LEASE.
Section 184 (15 U.S.C. 1667c) is amended by adding
at the end the following:
‘‘(d) ADVERTISEMENT FOR AUTOMOBILE LEASE.—
‘‘(1) CERTAIN
PRACTICES
PROHIBITED.—No
advertisement to promote or assist, directly or indi-
rectly, any lease for an automobile shall—
‘‘(A) state that no downpayment is re-
quired on the lease when the lessor requires a
capitalized cost reduction payment, acquisition
fee, vehicle trade-in or other significant pay-
ment upon initiation of the lease, except that
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payment of the first monthly payment on the
lease and any refundable deposit shall not be
considered a downpayment; and
‘‘(B) include the amount of any monthly or
periodic payment, downpayment, lease term, in-
terest rate, or other terms of leases that the les-
sor—
‘‘(i) does not routinely or customarily
offer or make available to customers, or
does not intend to make available generally
to customers as part of any offer or pro-
motion, for vehicles of the same make,
model and year as the vehicle advertised;
or
‘‘(ii) makes available only to selected
customers or to customers with preferred
credit ratings.
‘‘(2) LEASE PAYMENT AMOUNTS.—
‘‘(A) An advertisement to promote a lease
for an automobile that states a lease payment
amount, or must state a lease payment amount
under subsection (a)(1)(D), shall calculate such
payment amount on the basis of a lease pay-
ment formula which the Board shall set forth in
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regulation and which shall be based on the fol-
lowing information—
‘‘(i) the total capitalized cost of the
vehicle model advertised which shall not be
reduced or adjusted by any down payment
amount, capitalized cost reduction, vehicle
trade-in amount or other required pay-
ment;
‘‘(ii) a lease term of twenty-four (24)
months; and
‘‘(iii) a mileage allowance of 24,000
miles, or 12,000 miles for each year of the
lease term, before any excess mileage
charge may be imposed.
‘‘(B) An advertisement to promote a lease
for personal use of an automobile that states a
lease payment amount for a vehicle model as
provided under subparagraph (A) shall state
clearly and conspicuously that the stated lease
payment amount applies to a consumer lease
with a term of twenty-four (24) months, with
no downpayment or trade-in amount and with
an annual mileage allowance of 12,000 miles.
‘‘(C) An advertisement to promote a lease
for an automobile that states a lease payment
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for a vehicle model as provided under subpara-
graph (A) may state a lease payment amount
for the same vehicle model that is different
than that required to be stated under subpara-
graph (A): Provided, however, That—
‘‘(i) the lease payment amount is not
presented more prominently than the lease
payment amount required to be stated
under subparagraph (A); and
‘‘(ii) the advertisement clearly and
conspicuously identifies the lease terms or
payment amounts that explain the dif-
ference between the lease payment amount
and the payment amount required to be
stated under subparagraph (A).’’.
SEC. 7. AVAILABILITY OF WRITTEN INFORMATION.
Section 184 (15 U.S.C. 1667c), as amended by sec-
tion 6, is amended by adding at the end the following:
‘‘(e) AVAILABILITY OF WRITTEN INFORMATION.—
‘‘(1) ADVERTISED LEASES.—In connection with
any advertisement by an automobile dealer to pro-
mote or assist a consumer lease for an automobile
that includes a lease payment amount, as provided
in subsection (d)(2), or any national or regional ad-
vertisement to promote an automobile lease or vehi-