The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) have announced dollar thresholds that will apply for determining exempt consumer credit and lease transactions in the coming year for the Truth in Lending Act’s (TILA) Regulation Z, and Regulation M, related to the Consumer Leasing Act (CLA).
The threshold for 2021 has been set at $58,300, meaning TILA and CLA generally will apply to consumer credit transactions and consumer leases of that amount or less. Exceptions to this threshold are private education loans and loans secured by real property: these are subject to TILA regardless of the amount of the loan.
The calculation for the threshold is based on the annual percentage increase in the consumer price index for urban wage earners and clerical workers (CPI-W) as of June 1, 2020. This is pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. If there is no annual percentage increase, the agencies will not adjust the exemption threshold from the prior year, the bureau said in release.
“However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage change in CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account,” the bureau explained.
The CPI-W is a subset of the consumer price index for all urban consumers and represents approximately 29 percent of the U.S. population.