FRM_20180628_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements Associated with CFPB’s Regulation M
(FR M; OMB No. 7100-0202)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
with revision, the Recordkeeping and Disclosure Requirements Associated with CFPB’s
Regulation M (FR M; OMB No. 7100-0202). Since 2011, the Consumer Financial Protection
Bureau (CFPB) has been responsible for issuing Consumer Leasing Act (CLA)1 regulations that
apply to depository institutions and other lessors. However, the Board continues to be
responsible under the Paperwork Reduction Act (PRA) for renewing every three years the
information collections mandated by the CFPB’s regulation for institutions supervised by the
Board.2
The Board proposes to revise the methodology for estimating burden for disclosures to
provide additional clarity and transparency into the calculation. Five Board-supervised
institutions are estimated to be respondents and their current collective annual burden is
estimated to be 50 hours.3 With the proposed revisions, the paperwork burden is estimated to
increase to 258 hours.
Background and Justification
The CLA and Regulation M are intended to provide consumers with meaningful
disclosures about the costs and terms of leases for personal property. The disclosures enable
consumers to compare the terms for a particular lease with those for other leases and, when
appropriate, to compare lease terms with those for credit transactions. The CLA and
Regulation M also contain rules about advertising consumer leases and limit the size of balloon
payments in consumer lease transactions.

1

The CLA was enacted in 1976 as an amendment to the Truth in Lending Act (TILA) and is codified at 15 U.S.C.
1667-1667f. Regulation M is located at 12 CFR Part 213.
2
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking
authority for the CLA to the CFPB except for certain motor vehicle dealers that are excluded from the CFPB’s
authority, which remain subject to the Board’s Regulation M. See section 1029 of the Dodd-Frank Act, Pub. L. 111203, 124 Stat. 1376 (2010), 12 U.S.C. 5512, 5519, 5581. The CFPB’s Regulation M is published at 12 CFR Part
1013 and the Board’s Regulation M is published at 12 CFR Part 212.
3
The Board has supervisory authority regarding the CFPB’s Regulation M for the following institutions: state
member banks with assets of $10 billion or less that are not affiliated with an insured depository institution with
assets over $10 billion (irrespective of the consolidated assets of any holding company); non-depository affiliates of
such state member banks; and non-depository affiliates of bank holding companies that are not affiliated with an
insured depository institution with assets over $10 billion. See 12 U.S.C. 5515-5516. Notwithstanding the
foregoing, the CFPB and not the Board has supervisory authority for Regulation M with respect to automobile
leasing over non-banks defined as “larger participants” in the automobile finance market pursuant to 12 U.S.C. 5514
(implemented by 12 CFR 1090.108).

The CFPB’s Regulation M applies to all types of lessors of personal property (except
motor vehicle dealers excluded from the CFPB’s authority under Dodd-Frank Act section 1029,
which are covered by the Board’s Regulation M).4 The CLA and Regulation M require lessors
uniformly to disclose to consumers the costs, liabilities, and terms of consumer lease
transactions. Disclosures are provided to consumers before they enter into lease transactions and
in advertisements that state the availability of consumer leases on particular terms. The
regulation generally applies to consumer leases of personal property in which the contractual
obligation does not exceed $50,000, adjusted annually for inflation, and has a term of more than
four months.5 The CLA does not provide exemptions for small entities.
Description of Information Collection
The information collection under Regulation M is triggered by specific events. All
disclosures must be provided to the lessee prior to the consummation of the lease and when the
availability of consumer leases on particular terms is advertised. No reporting forms are
associated with Regulation M, but certain disclosures must be provided in a manner substantially
similar to the applicable model form in the appendix to the regulation. To ease the compliance
cost (particularly for small entities) model forms are appended to the regulation. Lessors are
required to “retain evidence of compliance” for 24 months, but the regulation does not specify
the types of records that must be retained. Regulation M’s recordkeeping and disclosure
requirements are described in greater detail below.
Section 1013.4 - Lease disclosures.
Under the CLA and Regulation M, lessors are required to provide certain key information
to consumers before they enter into a transaction to lease personal property for consumer (not
business) purposes. Lessors are persons who regularly lease, offer to lease, or arrange to lease
personal property to consumers. The costs and terms of the lease must be disclosed to
consumers clearly and conspicuously and must be in writing in a form the consumer may keep.
Disclosures may be in electronic form, subject to the consumer consent and other provisions of
the Electronic Fund Transfer Act (E-Sign Act).6 Lessors must disclose, among other things, the
total amount due at lease signing or delivery; the number, amount, due dates or periods of
payments under the lease, and the total amount of these payments; and other terms relating to the
rights and responsibilities of both parties to the lease.
Section 1013.7 - Advertising rules.
The advertising requirements apply to all persons that promote consumer leases through
commercial messages in any form, including messages in print or electronic media, direct
mailings, or on any sign or display. Advertising certain terms triggers the requirement for
additional disclosures. For television or radio advertisements, special rules allow alternative
disclosures using toll-free telephone numbers or written advertisements in a publication of
general circulation.
4
5
6

See 12 U.S.C. 5519; 12 CFR Part 213.
For 2018, the Regulation M threshold is $55,800.
See 15 U.S.C. 1693 et seq.

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Proposed Revisions
The Board proposes to revise the methodology for estimating burden for disclosures to
provide additional clarity and transparency into the calculation. Specifically, the Board proposes
to estimate disclosure burden using the estimated average number of lease contracts each Boardsupervised institution initiates annually, assuming it takes approximately 6.5 minutes to populate
and provide each disclosure.
Time Schedule for Information Collection
The information collection pursuant to Regulation M is triggered by specific events.
Disclosures must be provided to the lessee prior to the consummation of the lease and when the
availability of consumer leases on particular terms is advertised. There is no reporting form
associated with the requirements of Regulation M. Lease-specific disclosures are not collected
by the Board, are not publicly available, and are not published. Disclosures of lease terms that
appear in advertisements are available to the public.
Legal Status
Sections 105(a) and 187 of TILA (15 U.S.C. 1604(a) and 1667f respectively), authorize
the CFPB to issue regulations to carry out the provisions of the CLA. The CFPB’s
Regulation M, 12 CFR Part 1013, implements these statutory provisions. An institution’s
recordkeeping and disclosure obligations under Regulation M are mandatory. Because the Board
does not collect any information pursuant to the CFPB’s Regulation M, no issue of
confidentiality normally arises. In the event the Board were to retain information regarding
consumer leases during the course of an examination, the information regarding the consumer
and the lease would be kept confidential pursuant to section (b)(8) of the Freedom of Information
Act (5 U.S.C. 522 (b)(8)).
Consultation Outside the Agency
On April 5, 2018, the Board published an initial notice in the Federal Register
(83 FR 14639) requesting public comment for 60 days on the extension, with revision, of the
FR M. The comment period for this notice expired on June 4, 2018. The Board did not receive
any comments. On June 20, 2018, the Board published a final notice in the Federal Register
(83 FR 28640). The revisions will be implemented as proposed.
Estimate of Respondent Burden
The current total annual burden for Board-supervised institutions for this information
collection is estimated to be 50 hours, and with proposed revisions is estimated to increase to
258 hours, as shown in the table below. The Board estimates that only five Board-supervised

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institutions engage in consumer leasing7 with an estimated average of 456 transactions per
institution per year. The Board also estimates that the five Board-supervised institutions
advertise their leasing program approximately four times per year. These recordkeeping and
disclosure requirements represents less than 1 percent of total Federal Reserve System
paperwork burden.
No paperwork burden is deemed to be associated with the recordkeeping requirement in
Regulation M that lessors “retain evidence of compliance” for a minimum of two years after the
date disclosures are required to be made (section 213.8). The regulation does not specify the
kind of records that must be retained for this purpose.
Estimated
Estimated
Number of
Annual
average minutes annual burden
respondents8 frequency
per response
hours

FR M
Current
Disclosure
Section 1013.4
Lease disclosures
Section 1013.7
Advertising rules

5

4

125

42

5

4

25

8
50

5

461

6.5

250

5

4

25

Total

8
258

Change

208

Total
Proposed
Disclosure
Section 1013.4
Lease disclosures
Section 1013.7
Advertising rules

The current cost to the public is estimated to be $2,803 and with proposed changes the cost to the
public is estimated to increase to $14,461.9

7

Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income (Call Reports)
(FFIEC 031 and FFIEC 041; OMB No. 7100-0036), Schedule RC-C, data item 10.a, Leases to individuals for
household, family, and other personal expenditures.
8
Of these respondents, one is considered a small entity as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/document/support--table-size-standards.
9
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2017, published March 30, 2018, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Since the Board does not collect any information, the cost to the Federal Reserve System
is negligible.

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