Dollar thresholds have been set at $57,200 for determining exempt consumer credit and lease transactions in 2019, the Federal Reserve and the Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) said in a joint release Wednesday.
The new thresholds, effective Jan. 1, are an increase of 2.5% from the 2018 level of $55,800, and detailed in notices slated to publish Friday in the Federal Register.
The thresholds extend the protections of Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) to credit and leases that fall underneath them. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), requires that the thresholds be adjusted annually.
However, 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 stated in their release.
Under Dodd-Frank, the threshold adjustments are 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 agencies will 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.
The agencies also noted that although Dodd-Frank generally transferred rulemaking authority under Truth in Lending and Consumer Leasing to the BCFP, the Fed retains authority to issue rules for certain motor vehicle dealers. Therefore, the agencies are issuing these notices jointly, the agencies said.
Truth in Lending Act (Regulation Z) – Final rules, official interpretations and commentary
Consumer Leasing Act (Regulation M) – Final rules, official interpretations and commentary