The CFPB and Federal Reserve Board have proposed amendments to their official Regulations Z and M staff commentaries to memorialize the calculation method used by the agencies each year to adjust the thresholds for exempt consumer credit transactions and consumer leases.

Both the CFPB’s and Fed’s Regulations Z and M and their accompanying commentaries provide that the exemption thresholds will be adjusted annually effective January 1 of each year based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1.  If there is no annual percentage increase in the CPI-W, the CFPB and Fed do not adjust the exemption thresholds from the prior year.  The agencies base this position on Section 1100E(b) of the Dodd-Frank Act, which states that the thresholds must be adjusted by the “annual percentage increase” in the CPI-W (emphasis added).

The CFPB and Fed propose to add new commentary for each regulation that would:

  • provide that if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year.
  • set forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year.

Comments on the proposals must be received on or before 30 days after their publication in the Federal Register.