The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) on November 23 issued a final ruling on the method used to adjust thresholds for exempting certain consumer and lease transactions.
In compliance with the Truth in Lending Act and the Consumer Leasing Act, which apply to consumer credit transactions and consumer leases at or below thresholds, the new rule is a clarification of percentage increases established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank stated that exemption thresholds covered by the above acts would be adjusted annually according to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Under this new rule, that calculation method will allow thresholds to keep pace with the CPI-W, as well as bar agencies from adjusting that exemption threshold even when no annual percentage increase in the CPI-W occurs. For 2017, this calculation method will also apply to the thresholds for exempt credit and lease transactions.
The reason for the joint ruling from the Federal Reserve Board and the CFPB is that while the latter has rulemaking authority over most aspects of the Truth in Lending Act and the Consumer Leasing Act, the Federal Reserve Board governs rules pertaining to certain motor vehicle dealers.