3170-0006 CLA (M) 2015 renewal SS-30day-final

BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
CONSUMER LEASING ACT
(REGULATION M) 12 CFR 1013
(OMB CONTROL NUMBER: 3170-0006)

OMB TERMS OF CLEARANCE:
Not applicable. The Office of Management and Budget (OMB) did not provide Terms of
Clearance when approved this information collection on July 6, 2012.
ABSTRACT:
Consumers rely upon the disclosures required by the Consumer Leasing Act, 15 U.S.C.
1667 et seq. (CLA) and Regulation M, 12 CFR 1013, for information to comparison shop among
leases, as well as to ascertain the true costs and terms of lease offers. Federal and state
enforcement and private litigants use the records to ascertain whether accurate and complete
disclosures of the cost of leases have been provided to consumers prior to consummation of the
lease. This information provides the primary evidence of law violations in CLA enforcement
actions brought by federal agencies. Without Regulation M's recordkeeping requirement, the
agencies' ability to enforce the CLA would be significantly impaired.

A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Consumer Leasing Act, 15 U.S.C. 1667 et seq. (CLA), an amendment to the Truth
in Lending Act (TILA), 15 U.S.C. 1601 et seq., was enacted to foster comparison shopping and
informed decision making by requiring accurate disclosure of the costs and terms of leases to
consumers. Lessors are subject to disclosure requirements that apply to both open-end leases
(i.e., with a residual due at lease end) and closed-end leases (i.e., “walkaway” leases, with no
substantial amount due at lease end).
Disclosure
Regulation M imposes disclosure requirements on all types of lessors, including
automobile lessors (such as auto dealers, independent leasing companies, and manufacturers’
captive finance companies), computer lessors (such as computer dealers and other retailers),
furniture lessors, various electronic commerce lessors, and diverse types of lease advertisers, and
others. These requirements are intended to ensure that consumers are fully apprised of the terms
of leases prior to consummation of the transaction. The written disclosures required by

Regulation M are derived from statutory disclosures and directives mandated by the CLA. See
12 CFR 1013.4; 15 U.S.C. 1667a; 15 U.S.C. 1667f (written disclosures); 12 CFR 1013.7; 15
U.S.C. 1667c; 15 U.S.C. 1667f (advertising disclosures).
Regulation M includes model forms and clauses that can be used to comply with the
written disclosure (non-advertising) requirements of the CLA and Regulation M. See
Appendices A-1, A-2, and A-3 to Regulation M. Correct use of these model forms and clauses
insulates lessors from liability under the CLA and Regulation M. See comment I-1.
Recordkeeping
Section 1013.8 of Regulation M requires lessors to retain evidence of compliance with
its requirements (other than its advertising rules) but does not specify the particular records to
be kept. Entities subject to Regulation M may choose the records they consider adequate to
show compliance, and each entity may interpret the requirement differently. Records, however,
must be retained for twenty-four months.
2. Use of the Information
As noted above, consumers rely upon the disclosures required by the CLA and
Regulation M for information to comparison shop among leases, as well as to ascertain the true
costs and terms of lease offers.
Federal and state enforcement and private litigants use the records to ascertain whether
accurate and complete disclosures of the cost of leases have been provided to consumers prior to
consummation of the lease. This information provides the primary evidence of law violations in
CLA enforcement actions brought by federal agencies. Without Regulation M’s recordkeeping
requirement, the agencies’ ability to enforce the CLA would be significantly impaired.
3. Use of Information Technology
The disclosures required by Regulation M may be provided to the consumer in electronic
form, subject to compliance with the consumer consent and other applicable provisions of the
Electronic Signatures in Global and National Commerce Act (E-Sign Act), 15 U.S.C. 7001 et
seq. Use of such electronic communications is consistent with the Government Paperwork
Elimination Act (GPEA), Title XVII of Pub. L. 105-277, codified at 44 U.S.C. 3504 note. The
E-Sign Act and GPEA serve to reduce businesses’ compliance burden related to federal
requirements, including Regulation M, by enabling lessors to utilize more efficient electronic
media for disclosures and compliance.
Regulation M also permits lessors to retain records on any method that reproduces
records accurately, including computer programs, microfilm, or microfiche. Lessors need only
retain enough information to reconstruct the required disclosure or other records. See 12 CFR
1013.8 and comment 8-1.
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Most lessors use computer support to calculate the required information and generate
the mandated disclosures, thereby limiting the burden on these entities.
4. Efforts to Identify Duplication
The disclosures required by the CLA and Regulation M are not otherwise available.
Although some lease cost information is contained in contractual documents, the information is
not standardized, and as a result, consumers cannot use them efficiently to comparison shop or
fully appreciate lease terms.
The recordkeeping requirement of Regulation M preserves the information provided by
lessors to consumers considering the costs and terms of lease offers. The lessor is the only
source of this information. No other federal law mandates retention of this information. No state
law known to the CFPB imposes this requirement, although some states may have other rules
applicable to consumer leases.
5. Efforts to Minimize Burdens on Small Entities
The CLA and Regulation M disclosure and recordkeeping requirements are imposed on
all lessors. Most lessors today utilize some measure of computerization in their business, and
Regulation M permits lessors to rely on computer support, among other alternatives, to meet
their recordkeeping and disclosure requirements. This flexibility presumably yields reduced
recordkeeping and disclosure costs (see #3 above). Regulation M also provides model forms and
clauses that may be used to comply with its requirements, and correct use of these forms and
clauses insulates a lessor from liability for the respective requirements.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
The disclosure requirements are needed to facilitate comparison cost shopping and to
spur informed lease decision making. If these requirements were eliminated, consumers would
not have access to this critical information. Their right to sue under the CLA would be
undermined, and enforcement agencies could not fulfill their charge in enforcing CLA.
The current record retention period of two years supports the one-year statute of
limitations for private actions, and enforcement agencies’ need for sufficient time to bring
enforcement actions regarding lease transactions. If the retention period were shortened,
consumers who sue under the CLA, and the administrative agencies, might find that lessor
records needed to prove violations of the CLA no longer exist.
7. Circumstances Requiring Special Information Collection
The recordkeeping and disclosure requirements in Regulation M are consistent with the
applicable guidelines contained in 5 CFR 1320.5(d)(2).

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8. Consultation Outside the Agency
We have consulted with industry experts and other federal regulators to gather
information relating to the burdens of CLA and Regulation M. In addition, in accordance with 5
CFR §1320.8(d)(1), the Bureau has published a notice Federal Register allowing the public 60
days to comment on this proposed the extension (renewal) of this currently approved collection
of information. One comment was received, however it was not related to the PRA estimates or
calculations and so will not be responded to here. Further and in accordance with 5 CFR
§1320.5(a)(1)(iv), the Bureau has also published a notice in the Federal Register allowing the
public 30 days to comment on the submission of this information collection request to the Office
of Management and Budget.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
The recordkeeping and written disclosure requirements contain private financial
information about consumers who apply for and/or obtain consumer leases. Such information is
protected by the Right to Financial Privacy Act, 12 U.S.C. 3401 et seq. Such records may also
constitute confidential customer lists. However, there is no part of the rule that mandates
information collection by the CFPB.
To the extent that information covered by a recordkeeping requirement is collected by the
CFPB for law enforcement purposes, the confidentiality provisions of CFPB’s rules on
Disclosure of Records and Information, 12 CFR Part 1070, would apply.
11. Justification for Sensitive Questions
Regulation M only requires institutions to provide leasing information disclosures to
consumers and keep records of those disclosures. No questions of a sensitive nature are asked of
respondents.

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12. Estimated Burden of Information Collection
Labor Hours: 5,018
Exhibit 1: Burden Hour Summary

Regulation
1013.3
1013.4(a)
through (e),
g(1),
h(1)(2),(i)
through (t)
1013.5 (a)
through (c)
1013.7(a)
through (e)

1013.7(f)

1013.8

Type
Requires
Disclosures
described in 1013.4
Content of
disclosures
required by 1013.3
for any "consumer
lease"
Extends disclosure
requirements of
1013.3 to lease
renogetiation and
extension
Advertising
disclosures
Advertising
disclosures on
TV/Radio
alternative
requirements
Recordkeeping

Non-Motor Vehicle Lessors Labor Burden
Ongoing
One time
Average
Average
Responses Response
Responses Response
Total
per
per
Time
Time
Respondents Respondent
Hours Respondents Respondent (hours)
(hours)

Total
Hours

Combined Total

376

1

0.00

0

13,718

1

0.00

0

0

376

1

5.13

1928

13,718

1

0.13

1783

3,711

376

1

5.13

1928

13,718

1

0.13

1783

3,711

0

0

N/A

0

0

0

N/A

0

0

0

0

N/A

0

0

0

N/A

0

0

376

1

5.13

1928

13,718

1

0.05

Other Lessors Total
CFPB portion

5784
2892

686

2,614

4253
2126

10,036
5,018

The CFPB and Federal Trade Commission (FTC) share enforcement authority for
those non-depository institutions subject to the CFPB’s regulation M, with the CFPB
assuming burden for half of all non-depository institutions. Our estimate excludes burden
for motor vehicle dealers, which the FTC assumes burden for. The CFPB believes that
depository institutions represent a negligible segment of the leasing market.
While the CFPB includes section 1013.3 in the table above, we attribute to it no burden,
as it just refers to other provisions in the regulation, where we do estimate burden. The CFPB
estimates the total labor burden for ongoing recordkeeping and disclosure requirements under
Regulation M to be 10,036 hours for non-motor vehicle lessors. The CFPB assumes 5,018
hours of this burden associated with regulation M. The CFPB estimates of respondent and
market volumes are drawn from a number of public and proprietary sources. 1
Associated Labor Cost: $180,598

1

Market size sources include internal CFPB automobile markets data, Mintel® auto advertising data, publicly
available Census data on County Business Patterns (2013-2014), and previous FTC estimate under OMB 3084-0086
(2012).

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The CFPB calculated labor costs by estimating the burden hours associated with
complying with the required disclosures, advertising disclosures, and recordkeeping activates
described in Exhibit 1, 2 and applying appropriate hourly cost figures. 3 With a composite wage
of $35.99, the cost for these labor hours then works out to be 10,036 hours * $35.99/hour =
$361,196 labor cost overall, of which 5,018 hours * $35.99/hour = $180,598 labor cost is
attributed to the CFPB.
13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Additional Materials Cost: $14,137.23
Exhibit 2: Additional Materials Cost
Non-Motor-Vehicle Materials Burden

Regulation

Type

Respondents

Responses per
Respondent

Cost per
Response

Total

1013.3

Requires Disclosures described in
1013.4

13,718

12

$0.00

$0.00

1013.4(a) through
(e), g(1), h(1)(2),(i)
through (t)

Content of disclosures required by
1013.3 for any "consumer lease"

13,718

12

$0.08

$13,052.16

13,718

12

$0.08

$13,052.16

Extends disclosure requirements of
1013.5 (a) through
1013.3 to lease renogetiation and
(c)
extension
1013.7(a) through
(e)

Advertising disclosures

0

$0.00

1013.7(f)

Advertising disclosures on
TV/Radio alternative requirements

0

$0.00

1013.8

Recordkeeping

13,718

12

$0.01

$2,170.13
$28,274.45
$14,137.23

Other Lessors Total
CFPB portion

2

These hourly estimates were based on previous PRA estimates compiled by the FTC; see OMB 3084-0086 (2012).
Wage burden was calculated as a composite wage, with weighting based on previous estimates and information
provided by various industry professionals. Median values from the BLS Occupational Employment and Wages data
were used to estimate a composite wage as 5% Compliance Officer (occupation code 13-1041) at $30.93/hour, 5%
Sales Manager (occupation code 11-2022) at $52.18/hour), 45% Lawyer at $54.95/hour (occupation code 23-1011),
and 45% administrative assistant (occupation code 43-6014) at $15.79/hour), for a composite wage of $35.99.
3

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The CFPB claims responsibility for an additional $14,137.23 in non-motor-vehicle
lessor’s burden resulting from material costs directly related to the information collections in
Exhibit 2. The material costs of disclosures were estimated based on industry and supervisory
estimates as well as previous FTC estimates of per-transaction burden. 4 The number of
respondents and market sizes were estimated from proprietary and public data sources available
to the CFPB. 5 As discussed in section 12, while we include section 1013.3 in the table above,
we attribute it no cost, as it just refers to other provisions in the regulation, where we do estimate
cost.
14. Estimated Cost to the Federal Government
As the CFPB does not collect any information, there are no additional costs to the Federal
Government.
15. Program Changes or Adjustments
Exhibit 3: Summary of Burden Changes
Total Respondents

Annual
Responses

Burden
Hours

Materials Cost

Total Requested

13,718

164,616

5,018

$14,137

Current OMB Inventory

67,858

67,858

100,058

$0

-54,140
0
0
0
0
-54,140

96,758
0
0
0
0
96,758

-95,040
0
0
0
0
-95,040

$14,137
$0
$0
$0
$0
$14,137

Difference
Program Change
Discretionary
New Statue
Violation
Adjustment

The new estimates calculated by the CFPB reflect a decrease of -95,040 burden hours and
an increase of $14,137of material cost burden. The estimated burden hours are lower than CFPB
and FTC’s previous estimates for several reasons. First and foremost, the decrease in burden
hours represents a significant drop in the estimated number of non-motor-vehicle lessors in the
past 3 years. Secondly, the CFPB estimate excludes one-time costs that were associated with
rule changes in previous estimates, and also excludes previously reported burden associated with
motor-vehicle enforcement (the FTC assumes all burden related to motor vehicle leasing). The
increase in material cost arises because we provide an estimate for the small material burden
associated with each lease transaction. The decision to estimate per-transaction costs as material
burden reflects the CFPB’s belief that the process of providing disclosures and recordkeeping
has become almost entirely automated, but that there is a small cost of printing and technology
costs associated with each additional lease.
4

See 2 above.
Market size sources include internal CFPB automobile markets data, Mintel® auto advertising data, publicly
available Census data on County Business Patterns (2013-2014), and previous FTC estimates (see 4 above).

5

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16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.
17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will
be displayed on the Federal government’s electronic PRA docket at www.reginfo.gov. Inasmuch
as all forms associated with this collection are model forms and therefore their use is voluntary,
the display of the OMB control number would not be appropriate on them.

18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements
of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an
exemption to these certification requirements.

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