Dollar thresholds of $55,800 or less that will apply for determining exempt consumer credit and lease transactions in 2018 were announced Wednesday by the Federal Reserve and the Consumer Financial Protection Bureau (CFPB).
The thresholds apply in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing), which the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires be adjusted annually based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
If there is no annual percentage increase in the CPI-W, the Federal Reserve and the CFPB do not adjust the exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account.
Transactions at or below the thresholds are subject to the protections of the regulations.
Private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan, the agencies said.
The two agencies noted that the Dodd-Frank Act generally transferred rulemaking authority under the Truth in Lending Act and the Consumer Leasing Act to CFPB. However, the Federal Reserve retains authority to issue rules for certain motor vehicle dealers — therefore, the agencies made the threshold adjustment announcement jointly.