CFPB Consumer
Laws and Regulations Consumer Leasing
CFPB Manual V.2 (October 2012) CLA 1
Consumer Leasing Act
1
For consumers, leasing is an alternative to buying property either with cash or on credit. A lease
is a contract between a lessor (the property owner) and a lessee (the property user) for the use of
property subject to stated terms and limitations for a specified period and at a specified payment.
The Consumer Leasing Act (15 U.S.C. 1667 et seq.) (CLA) was passed in 1976 to assure that
meaningful and accurate disclosure of lease terms is provided to consumers before entering into
a contract. It applies to consumer leases of personal property. With this information, consumers
can more easily compare one lease with another, as well as compare the cost of leasing with the
cost of buying on credit or the opportunity cost of paying cash. In addition, the CLA puts limits
on balloon payments sometimes due at the end of a lease and regulates advertising.
Originally, the CLA was part of the Truth in Lending Act and was implemented by Regulation Z.
When Regulation Z was revised in 1981, Regulation M was issued and contained those
provisions that govern consumer leases.
The Electronic Signatures in Global and National Commerce Act (the E-Sign Act), 15 U.S.C. 7001
et seq., was enacted in 2000 and did not require implementing regulations. On November 9, 2007,
amendments to Regulation M and the official staff commentary were issued to simply the regulation
and provide guidance on the electronic delivery of disclosures consistent with the E-Sign Act.
2
The Dodd-Frank Act granted rulemaking authority under the CLA to the Consumer Financial
Protection Bureau (CFPB) and, with respect to entities under its jurisdiction, granted authority to
the CFPB to supervise for and enforce compliance with the CLA and its implementing
regulations.
3
In December 2011, the CFPB restated the Federal Reserve’s implementing
regulation at 12 CFR Part 1013 (76 Fed. Reg. 78500)(December 19, 2011).
Today, a relatively small number of banks engage in consumer leasing. The trend seems to be for
leasing to be carried out through specialized bank subsidiaries, vehicle finance companies, other
finance companies, or directly by retailers.
1
These reflect FFIEC-approved procedures.
2
72 Fed. Reg. 63456, November 9, 2007. These amendments took effect December 10, 2007, with a mandatory compliance date
of October 1, 2008.
3
Dodd-Frank Act, Secs. 1002(12)(B), 1024(b)-(c), and 1025(b)-(c); 12 USC §§ 5481(12)(B), 5514(c), and 5515(c). Section
1029 of the Dodd-Frank Act generally excludes from this transfer of authority, subject to certain exceptions, any rulemaking
authority over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and
servicing of motor vehicles, or both.