RegM_20150430_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements
Associated with CFPB’s Regulation M (Consumer Leasing) (Reg M) (OMB No. 7100-0202)
Summary
The Board of Governors of the Federal Reserve System (the Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the Recordkeeping and Disclosure Requirements Associated with CFPB’s
Regulation M (Consumer Leasing) (Reg M) (OMB No. 7100-0202). Since 2011, the Consumer
Financial Protection Bureau (CFPB) has been responsible for issuing Consumer Leasing Act
(CLA)1 regulations that apply to depository institutions and other lessors. However, the Board
continues to be responsible under the Paperwork Reduction Act (PRA) for renewing every three
years the information collections mandated by the regulation for institutions supervised by the
Board.2 The PRA classifies reporting, recordkeeping, or disclosure requirements of a regulation,
including the disclosure and recordkeeping requirements of Regulation M, as a “collection of
information.”3
Four Federal Reserve-supervised institutions are estimate to be respondents for purposes
of the PRA, and their collective annual burden is estimate to be 40 hours.4
Background and Justification
The CLA and Regulation M are intended to provide consumers with meaningful
disclosures about the costs and terms of leases for personal property. The disclosures enable
consumers to compare the terms for a particular lease with those for other leases and, when
appropriate, to compare lease terms with those for credit transactions. The CLA and
Regulation M also contain rules about advertising consumer leases and limit the size of balloon
payments in consumer lease transactions.
The CFPB’s Regulation M applies to all types of lessors of personal property (except
motor vehicle dealers excluded from the CFPB’s authority under Dodd-Frank Act section 1029,
which are covered by the Board’s Regulation M5). The CLA and Regulation M require lessors
to disclose to consumers uniformly the costs, liabilities, and terms of consumer lease
1

The CLA was enacted in 1976 as an amendment to the Truth in Lending Act (TILA) and is codified at 15 U.S.C.
§§ 1667-1667f. Regulation M is located at 12 C.F.R. Part 213.
2
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking
authority for the CLA to the CFPB except for certain motor vehicle dealers that are excluded from the CFPB’s
authority, which remain subject to the Board’s Regulation M. See section 1029 of the Dodd-Frank Act, Pub. L. 111203, 124 Stat. 1376 (2010), 12 U.S.C. 5512, 5519, 5581. The CFPB’s Regulation M is published at 12 C.F.R. part
1013 and the Board’s Regulation M is published at 12 C.F.R. part 212.
3
44 U.S.C. § 3501 et seq.
4
Appendix B – Federal Enforcement Agencies – of Regulation M defines the Federal Reserve-supervised
institutions as state member banks, branches and agencies of foreign banks (other than federal branches, federal
agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by
foreign banks, and organizations operating under Section 25 or 25A of the Federal Reserve Act.
5
12 U.S.C. 5519; 12 C.F.R. part 213.

transactions. Disclosures are provided to consumers before they enter into lease transactions and
in advertisements that state the availability of consumer leases on particular terms. The
regulation generally applies to consumer leases of personal property in which the contractual
obligation does not exceed $53,500 and has a term of more than four months. The CLA does not
provide exemptions for small entities.
In April 2011, shortly before primary rule writing authority for the CLA transferred to the
CFPB, the Board published a final rule that established a new dollar threshold for lease
transactions subject to Regulation M, implementing an amendment to the CLA by the DoddFrank Act.6 This amendment increased the dollar threshold for lease contracts subject to the
CLA and Regulation M from $25,000 to $50,000. The amendment also required that this
threshold be adjusted annually for inflation by the annual percentage increase in the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau
of Labor Statistics. For 2014, the Regulation M threshold is $53,500,7 which will be increased to
$54,600 effective January 1, 2015.8
Description of Information Collection
The information collection under Regulation M is triggered by specific events. All
disclosures must be provided to the lessee prior to the consummation of the lease and when the
availability of consumer leases on particular terms is advertised. There are no required reporting
forms associated with Regulation M. To ease the compliance cost (particularly for small
entities) model forms are appended to the regulation. Lessors are required to “retain evidence of
compliance” for 24 months, but the regulation does not specify the types of records that must be
retained. Regulation M’s recordkeeping and disclosure requirements are described in greater
detail below.
Lease Disclosures (Section 1013.4)
Under the CLA and Regulation M, lessors are required to provide certain key information
to consumers before they enter into a transaction to lease personal property for consumer (not
business) purposes. Lessors are persons who regularly lease, offer to lease, or arrange to lease
personal property to consumers. The costs and terms of the lease must be disclosed to
consumers clearly and conspicuously and must be in writing in a form the consumer may keep.
Disclosures may be in electronic form, subject to the consumer consent and other provisions of
the Electronic Fund Transfer Act (the “E-Sign Act”).9 Lessors must disclose, among other
things, the total amount due at lease signing or delivery; the number, amount, due dates or
periods of payments under the lease, and the total amount of these payments; and other terms
relating to the rights and responsibilities of both parties to the lease.

6

Pub. L. 111-203, § 1100E, 124 Stat. 1376 (2010), amending 15 U.S.C. 1667(1). See 76 FR 18349, Apr. 4, 2011.
78 FR 70193 (Nov. 25, 2013). This threshold adjustment was issued jointly by the Board, for its Regulation M at
12 C.F.R. part 213, and the CFPB, for its Regulation M at 12 C.F.R. 1013.
8
79 FR 56482 (Sept. 22, 2014).
9
15 U.S.C. 1693 et seq.
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Advertising Rules (Section 1013.7)
The advertising requirements apply to all persons that promote consumer leases through
commercial messages in any form, including messages in print or electronic media, direct
mailings, or on any sign or display. Advertising certain terms triggers the requirement for
additional disclosures. For television or radio advertisements, special rules allow alternative
disclosures using toll-free telephone numbers or written advertisements in a publication of
general circulation.
Time Schedule for Information Collection
The information collection pursuant to Regulation M is triggered by specific events.
Disclosures must be provided to the lessee prior to the consummation of the lease and when the
availability of consumer leases on particular terms is advertised. There is no reporting form
associated with the requirements of Regulation M. Lease-specific disclosures are not collected
by the Federal Reserve, are not publicly available, and are not published. Disclosures of lease
terms that appear in advertisements are available to the public.
Legal Status
The Board’s Legal Division has determined that sections 105(a) and 187 of TILA (15
U.S.C. §§ 1604(a) and 1667f respectively, authorize the CFPB to issue regulations to carry out
the provisions of the CLA. The CFPB’s Regulation M, 12 C.F.R. Part 1013, implements these
statutory provisions. An institution’s recordkeeping and disclosure obligations under
Regulation M are mandatory. Because the Federal Reserve does not collect any information
pursuant to the CFPB’s Regulation M, no issue of confidentiality normally arises. Furthermore,
the lease information regarding individual leases with consumers is confidential between the
institution and the consumer. In the event the Board were to retain information regarding
consumer leases during the course of an examination, the information regarding the consumer
and the lease would be kept confidential pursuant to section (b)(8) of the Freedom of Information
Act (5 U.S.C. § 522 (b)(8)).
Consultation Outside the Agency
On January 28, 2015, the Federal Reserve published a notice in the Federal Register
(80 FR 4571) requesting public comment for 60 days on the extension, without revision, of this
information collection. The comment period for this notice expired on March 30, 2015. The
Federal Reserve did not receive any comments. On April 21, 2015, the Federal Reserve
published a final notice in the Federal Register (80 FR 22186).
Estimate of Respondent Burden
The total annual burden for Federal Reserve-supervised institutions for this information
collection is estimated to be 40 hours, as shown in the table below. The Federal Reserve has

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estimated that only four Federal Reserve-supervised institutions engage in consumer leasing10
with an estimated average frequency of four transactions per year. The Federal Reserve also
estimates that the four Federal Reserve-supervised institutions advertise their leasing program
approximately four times per year. This represents less than 1 percent of total Federal Reserve
System paperwork burden.
No paperwork burden is deemed to be associated with the recordkeeping requirement in
Regulation M that lessors “retain evidence of compliance” for a minimum of two years after the
date disclosures are required to be made (section 213.8). The regulation does not specify the
kind of records that must be retained for this purpose.
Number of
respondents11

Annual
frequency

Estimated
average time
per response

Disclosures (Section 1013.4)

4

4

2.08 hours

33

Advertising (Section 1013.7)

4

4

25 minutes

7

Reg M

Total

Estimated
annual burden
hours

40

The total cost to the public is estimated to be $2,070.12
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the Federal Reserve does not collect any information, the cost to the Federal
Reserve System is negligible.

10

Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income (Call Reports)
(FFIEC 031 and FFIEC 041; OMB No. 7100-0036), Schedule RC-C, data item 10.a, Leases to individuals for
household, family, and other personal expenditures.
11
Of these respondents, one is considered a small entity as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/content/table-small-business-size-standards.
12
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
2014, published March 25, 2015, www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the
BLS Occupational Classification System, www.bls.gov/soc/.

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