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Federal Reserve and Consumer Financial Protection Bureau (CFPB) Announce Increases in Dollar Thresholds in Regulations Z and M for Exempt Consumer Credit and Lease Transactions

On September 9, 2014 the Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) announced increases in the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. These increases “are consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amendments to the Truth in Lending Act and the Consumer Leasing Act to adjust these thresholds annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.” The Dodd-Frank Act increased the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions from $25,000 to $50,000, effective July 21, 2011. In addition, the Dodd-Frank Act requires 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. Transactions at or below the thresholds are subject to the protections of the regulations. 

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. 

Based on these adjustments, the protections of the TILA and the Consumer Leasing Act 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 the Truth in Lending Act regardless of the amount of the loan. 

The joint press release is available here.

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