On November 13, the Consumer Financial Protection Bureau (CFPB) and the Federal Reserve (Fed) have put forth updated dollar thresholds for certain credit and lease transactions that fall within the purview of Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for the year 2024. Orrick, Herrington & Sutcliffe LLP provides an excellent analysis on this important development.
The revised thresholds for both regulations were increased from $66,400 to $69,500, putting into perspective an increase of 4.6 percent. This comes as a notable adjustment for legal professionals working with credit and lease transactions, particularly those in large corporations and law firms, who need to ensure compliance with these regulatory standards.
- Regulation Z, also known as the Truth in Lending Act, requires lenders to provide borrowers with detailed information about the cost and terms of credit. This includes information about annual percentage rates, finance charges, and the total amount being financed. The increase in thresholds implies that a greater amount of credit transactions will now be subject to these transparency requirements.
- Regulation M, also known as the Consumer Leasing Act, applies predominantly to leases of personal property. Essentially, it mandates that lessors provide lessees with clear disclosures about the costs and terms of leases. The updated thresholds put forth by the CFPB and Fed indicate that a higher dollar amount of lease transactions must now abide by these regulatory standards
In light of these updates, legal professionals are advised to review and evaluate their current practices to mitigate any potential risks and to ensure adherence to the updated regulations.