An Act to amend the Truth in Lending Act to protect consumers against inadequate and misleading leasing information, assure meaningful disclosure of lease terms, and limit ultimate liability in connection with leasing of personal property primarily for personal, family, or household purposes, and for other purposes.
PL 94-240 (H.R.8835), enacted 03/23/1976

PUBLIC LAW 94-240—MAR. 23, 1976 
90 STAT. 257 
Public Law 94-240 
94th Congress 
An Act 
To amend the Truth in Lending Act to protect consumers against inadequate and 
misleading leasing information, assure meaningful disclosure of lease terms, 
and limit ultimate liability in connection with leasing of personal property 
primarily for personal, family, or household purposes, and for other purposes. 
Mar. 23, 1976 
[H.R. 8835] 
Be it enacted hy the Senate and House of Rep^'esentatives 
of the 
United States of America 
in Congress assembled, That this Act may Consumer 
be cited as the "Consumer Leasing Act of 1976". 
1976°^ ^^^ °^ 
riNDINGS AND PURPOSE 
note. 
SEC. 2. Section 102 of the Truth in Lending Act (15 U.S.C. 1601) 
is amended by inserting " ( a ) " before the first sentence, and adding 
the following subsection: 
"(b) The Congress also finds that there has been a recent trend 
toward leasing automobiles and other durable goods for consumer use 
as an alternative to installment credit sales and that these leases have 
been offered without adequate cost disclosures. It is the purpose of this 
title to assure a meaningful disclosure of the terms of leases of per-
sonal property for personal, family, or household purposes so as to 
enable the lessee to compare more readily the various lease terms avail-
able to him, limit balloon payments in consumer leasing, enable com-
parison of lease terms with credit terms where appropriate, and to 
assure meaningful 
and 
accurate 
disclosures of 
lease terms 
in 
advertisements.". 
DISCLOSURE o r LEASE TERMS 
SEC. 3. The Truth in Lending Act (15 U.S.C. 1601-1665) is 
amended by adding at the end thereof a new chapter as follows: 
"Chapter 5—CONSUMER LEASES 
"Sec. 
"181. Definitions. 
"182. Consumer lease disclosures. 
"183. Lessee's liability on expiration or termination of lease, 
"184. Consumer lease advertising. 
"185. Civil liability. 
"186. Relation to State laws. 
"§181. Definitions 
"For purposes of this chapter— 
15 USC 1667. 
" (1) The term 'consumer lease' means a contract in the form of 
a lease or bailment for the use of personal property by a natural 
person for.a period of time exceeding four months, and for a total 
contractual obligation not exceeding $25,000, primarily for per-
sonal, family, or household purposes, whether or not the lessee 
has the option to purchase or otherwise become the owner of the 
property at the expiration of the lease, except that such term shall 
not include any credit sale as defined in section 103(g). Such term 15 USC 1602. 
does not include a lease for agricultural, business, or commercial 
purposes, or to a government or governmental agency or instru-
mentality, or to an organization. 
90 STAT. 258 
PUBLIC LAW 94-240—MAR. 23, 1976 
"(2) The term 'lessee' means a natural person who leases or is 
offered a consumer lease. 
"(3) The term 'lessor' means a person who is regularly engaged 
in leasing, offering to lease, or arranging to lease under a con-
sumer lease. 
"(4) The term 'personal property' means any property which 
is not real property under the laws of the State where situated 
at the time offered or otherwise made available for lease. 
" (5) The terms 'security' and 'security interest' mean any inter-
est in property which secures payment or performance of an 
obligation. 
"§ 182. Consumer lease disclosures 
15 use 1667a. 
"Each lessor shall give a lessee prior to the consummation of the lease 
a dated written statement on which the lessor and lessee are identified 
setting out accurately and in a clear and conspicuous manner the fol-
lowing information with respect to that lease, as applicable: 
" (1) A brief description or identification of the leased property; 
"(2) The amount of any payment by the lessee required at the 
inception of the lease; 
"(3) The amount paid or payable by the lessee for official fees, 
registration, certificate of title, or license fees or taxes; 
' (4) The amount of other charges payable by the lessee not 
included in the periodic payments, a description of the charges 
and that the lessee shall be liable for the differential, if any, 
between the anticipated fair market value of the leased property 
and its appraised actual value at the termination of the lease, if 
the lessee has such liability; 
"(5) A statement of the amount or method of determining the 
amount of any liabilities the lease imposes upon the lessee at the 
end of the term and whether or not the lessee has the option to 
purchase the leased property and at what price and time; 
"(6) A statement identifying all express warranties and guar-
antees made by the manufacturer or lessor with respect to the 
leased property, and identifying the party responsible for main-
taining or servicing the leased property together with a descrip-
tion of the responsibility; 
"(7) A brief description of insurance provided or paid for by 
the lessor or required of the lessee, including the types and 
amounts of the coverages and costs; 
" (8) A description of any security interest held or to be retained 
by the lessor in connection with the lease and a clear identification 
of the property to which the security interest relates; 
"(9) The number, amount, and due dates or periods of pay-
ments under the lease and the total amount of such periodic 
payments; 
"(10) Where the lease provides that the lessee shall be liable 
for the anticipated fair market value of the property on expira-
tion of the lease, the fair market value of the property at the incep-
tion of the lease, the aggregate cost of the lease on expiration, and 
the differential between them; and 
"(11) A statement of the conditions under which the lessee or 
lessor may terminate the lease prior to the end of the term and 
the amount or method of determining any penalty or other charge 
for delinquency, default, late payments, or early termination. 
The disclosures required under this section may be made in the lease 
contract to be signed by the lessee. The Board may provide by regula-
tion that any portion of the information required to be disclosed under 
PUBLIC LAW 94-240—MAR. 23, 1976 
90 STAT. 259 
this section may be given in the form of estimates where the lessor is 
not in a position to know exact information. 
*
*
§ 183. Lessee's liability on expiration or termination of lease 
"(a) Where the lessee's liability on expiration of a consumer lease 15 USC 1667b. 
is based on the estimated residual value of the propert}' such estimated 
residual value shall be a reasonable approximation of the anticipated 
actual fair market value of the property on lease expiration. There 
shall be a rebuttable presumption that the estimated residual value is 
unreasonable to the extent that the estimated residual value exceeds 
the actual residual value by more than three times the average payment 
allocable to a monthly period under the lease. In addition, where the 
lessee has such liability on expiration of a consumer lease there shall 
be a rebuttable presumption that the lessor's estimated residual value 
is not in good faith to the extent that the estimated residual value 
exceeds the actual residual value by more than three times the average 
payment allocable to a monthly period under the lease and such lessor 
shall not collect fi'om the lessee the amount of such excess liability on 
expiration of a consumer lease unless the lessor brings a successful 
action with respect to such excess liability. In all actions, the lessor 
shall pay the lessee's reasonable attorney's fees. The presumptions 
stated in this section shall not apply to the extent the excess of esti-
mated over actual residual value is due to physical damage to the 
property beyond reasonable wear and use, or to excessive use, and 
the lease may set standards for such wear and use if such standards 
are not unreasonable. Nothing in this subsection shall preclude the 
right of a willing lessee to make any mutually agreeable final adjust-
ment with respect to such excess residual liability, provided such an 
agreement is reached after teimination of the lease. 
"(b) Penalties or other charges for delinquency, default, or early 
termination may be specified in the lease but only at an amount which 
is reasonable in the light of the anticipated or actual harm caused by 
the delinquency, default, or early termination, the difficulties of proof 
of loss, and the inconvenience or nonfeasibility of otherwise obtaining 
an adequate remedy. 
"(c) If a lease has a residual value provision at the termination of 
the lease, the lessee may obtain at his expense, a professional appraisal 
of the leased property by an independent third party agreed to by 
both parties. Such appraisal shall be final and binding on the parties. 
"§ 184. Consumer lease advertising 
"(a) No advertisement to aid, promote, or assist directly or indi- 15 USC 1667c. 
rectly any consumer lease shall state the amount of any payment, the 
number of required payments, or that any or no downpayment or 
other payment is required at inception of the lease unless the adver-
tisement also states clearly and conspicuously and in accordance with 
regulations issued by the Board each of the following items of infor-
mation which is applicable: 
"(1) That the transaction advertised is a lease. 
"(2) The amount of any payment required at the inception of 
the lease or that no such payment is required if that is the case. 
"(3) The number, amounts, due dates or periods of scheduled 
payments, and the total of payments under the lease. 
"(4) That the lessee shall be liable for the differential, if any, 
between the anticipated fair market value of the leased property 
and its appraised actual value at the termination of the lease, if 
the lessee has such liability. 
"(5) A statement of the amount or method of determining the 
amount of any liabilities the lease imposes upon the lessee at the 
90 STAT. 260 
PUBLIC LAW 94-240—MAR. 23, 1976 
15 
use 
1667(1. 
15 
use 
1640. 
"ereditor." 
15 
use 
1614, 
1641. 
15 use 1667e. 
end of the term and whether or not the lessee has the option to 
purchase the leased property and at what price and time. 
" (b) There is no liability under this section on the part of any 
owner or personnel, as such, of any medium in which an advertisement 
appears or through which it is disseminated. 
«§ 185. Civil liability 
"(a) Any lessor who fails to comply with any requirement imposed 
under section 182 or 183 of this chapter with respect to any person 
is liable to such person as provided in section 130. 
"(b) Any lessor who fails to comply with any requirement imposed 
under section 184 of this chapter with respect to any person who suffers 
actual damage from the violation is liable to such person as provided 
in section 130. For the purposes of this section, the term xreditor' 
as used in sections 115, 130, and 131 shall include a lessor as defined 
in this chapter. 
"(c) Notwithstanding section 130(e), any action'under this section 
may be brought in any United States district court or in any other 
court of competent jurisdiction. Such actions alleging a failure to 
disclose or otherwise comply with the requirements of this chapter 
shall be brought within one year of the termination of the lease 
agreement. 
"§ 186. Relation to State laws 
"(a) This chapter does not annul, alter, or affect, or exempt any 
person subject to the provisions of this chapter from complying with, 
the laws of any State with respect to consumer leases, except to the 
extent that those laws are inconsistent with any provision of this 
chapter, and then only to the extent of the inconsistency. The Board 
is authorized to determine whether such inconsistencies exist. The 
Board may not determine that any State law is inconsistent with any 
provision of this chapter if the Board determines that such law gives 
greater protection and benefit to the consumer. 
"(b) The Board shall by regulation exempt from the requirements 
of this chapter any class of lease transactions within any State if it 
determines that under the law of that State that class of transactions 
is subject to requirements substantially similar to those imposed under 
this chapter or that such law gives greater protection and benefit to 
the consumer, and that there is adequate provision for enforcement." 
AMENDMENTS TO SECTION 1.^0 
15 use 1640. 
SEC. 4. Section 130 of the Truth in landing Act is amended as 
follows: 
(1) In subsection (a), after "chapter 4" insert "or 5". 
(2) In clause (2) (A) of subsection (a), insert "(i)" after 
" (A)", and insert after "transaction" a comma and the following: 
"or (ii) in the case of an individual action relating to a consumer 
Ante, p. 257. 
lease under chapter 5 of this title, 25 per centum of the total 
amount of monthly payments under the lease". 
(3) In paragraph (2) (B) of subsection (a), strike out "lesser 
of $100,000" and insert in lieu thereof "lesser of $500,000". 
(4) In subsection (b), insert "or chapter 5" after "this 
chapter" and strike out the word "finance". 
(5) In subsection (g), after "this chapter", insert "or chapter 
4 or 5 of this title", and insert after "consumer loan" a comma 
and "consumer lease". 
PUBLIC LAW 94-240—MAR. 23, 1976 
90 STAT. 261 
(CONFORMING AMENDMENT 
SEC. 5. The table of chapters of the Truth in Lending Act is 
amended by adding at the end thereof the following: 
"5. Consumer Leases 
181". 
EFFECTIVE DATE 
SEC. 6. This Act takes effect one year after the date of its enactment. 15 USC 1667 
note. 
Approved March 23, 1976. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 94-544 (Comm. on Banking, Currency and Housing) and No. 
94-872 (Comm. of Conference). 
SENATE REPORT No. 94-590 (Comm. on Banking, Housing and Urban Affairs). 
CONGRESSIONAL RECORD: 
VoL 121 (1975): Oct. 28, considered and passed House. 
VoL 122 (1976): Feb. 2, considered and passed Senate, amended. 
Mar. 9, Senate and House agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS: 
Vol. 12, No. 13 (1976): Mar. 23, Presidential statement. 
iiM 
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