On September 9, the Consumer Financial Protection Bureau and the Federal Reserve Board announced increases in the dollar thresholds in Regulation Z (Truth in Lending (TILA)) and Regulation M (Consumer Leasing Act (CLA)) for exempt consumer credit and lease transactions.  According to the Federal regulators, these increases are consistent with the Dodd-Frank Act and reflect an increase in the consumer price index.  “Transactions at or below the thresholds are subject to the protections of the regulations,” the agencies said.

Based on the adjustments announced today, the protections of TILA and CLA generally will apply to consumer credit transactions and consumer leases of $54,600 or less in 2015 – an increase of $1,100 from 2014.  However, private education loans and loans secured by real property (such as mortgages) are subject to TILA regardless of the amount of the loan.

Transactions covered under the statutes, which include most consumer loans and leases, are subject to protections designed to ensure informed use of credit by consumers, requiring that lenders make certain disclosures in writing that clearly lay out certain aspects of the transaction.  These disclosures include a statement of the loan creditor, payment schedule and length, and the interest rate and fees that the loan is subject to, among other requirements.  Failure to comply with these requirements exposes lenders to the possibility of cease-and-desist action or penalties from the relevant agency, or borrowers can also sue to privately enforce the statutes.

Although the Dodd-Frank Act generally transferred rulemaking authority under TILA and CLA to the CFPB, the Federal Reserve retains authority to issue rules for certain motor vehicle dealers.  Therefore, the agencies issued the adjustments jointly.

The adjustments to the thresholds reflect the annual percentage increase in the consumer price index as of June 1, 2014, and will take effect on January 1, 2015.