[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4788 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4788

To amend the Consumer Credit Protection Act to enhance the advertising 
    of the terms and costs of consumer automobile leases, to permit 
   consumer comparison of advertised lease offerings, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 10, 1998

 Mr. LaFalce introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
To amend the Consumer Credit Protection Act to enhance the advertising 
    of the terms and costs of consumer automobile leases, to permit 
   consumer comparison of advertised lease offerings, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Consumer 
Automobile Lease Advertising Act of 1998''.
    (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Consumer Credit Protection Act.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1) There has been a continuing trend toward leasing of 
        automobiles by consumers as an alternative to installment 
        credit sales, with automobile leases now constituting over one-
        third of all new automobile transactions.
            (2) Current automobile leasing practices do not provide 
        consumers with consistent or adequate information to permit 
        comparison shopping among lease offerings. Important 
        information about lease costs and terms are not available until 
        the consumer visits an automobile dealership, are typically 
        provided only as part of lease negotiations, and often are not 
        fully disclosed until the signing of the lease documents.
            (3) Automobile lease advertisements tend to confuse and 
        mislead consumers by highlighting the most attractive terms of 
        leases, by minimizing or omitting additional costs, terms or 
        penalties, and by advertising monthly payment amounts based on 
        lease terms that are different from those customarily offered 
        to or selected by consumers.
            (4) With leases accounting for a large and growing 
        percentage of all new automobile transactions, there is 
        increasing need for automobile manufacturers, automobile 
        dealers and other firms involved in leasing to provide more 
        relevant and easily understood information in advertising and 
        in writing at the auto dealership to permit consumers to 
        evaluate intelligently the attractiveness of leases offered by 
        an automobile dealership, to compare terms of leases offered 
        and advertised by competing dealerships, and to compare the 
        benefits of automobile leases with alternative purchase 
        transactions.
    (b) Purpose.--The purpose of the amendments made by this Act is to 
simplify and standardize automobile lease advertising in order to 
provide consumers with more relevant and easily understood information 
regarding the terms and costs of lease offerings earlier in the leasing 
process to permit consumers to compare lease and purchase options and 
to comparison shop among competing lease opportunities.

SEC. 3. APPLICABLE CONSUMER LEASES.

    Section 181(1) of the Consumer Credit Protection Act (15 U.S.C. 
1667(1)) is amended--
            (1) by striking ``$25,000'' and inserting ``$50,000''; and
            (2) by adding at the end of the following: ``The limit on 
        the contractual obligation which comes within such term shall 
        be adjusted annually based upon the change reported in the 
        Consumer Price Index by the Department of Labor in June of the 
        preceding year.''.

SEC. 4. GENERAL LEASE ADVERTISING.

    (a) Amendments.--Section 184(a) (15 U.S.C. 1667c) is amended--
            (1) by striking ``(a)'' and inserting ``(a)(1)'';
            (2) by redesignating paragraphs (1) through (5) as 
        subparagraphs (A) through (E), respectively;
            (3) by adding at the end the following:
            ``(2) Information required to be disclosed under paragraph 
        (1) shall be in the same language that principally is used in 
        the advertisement.
            ``(3) Identification in a television advertisement of the 
        advertised transaction as a lease, as required by paragraph 
        (1)(A), shall be included in both the audio and video portions 
        of the television advertisement.
            ``(4) The requirements of this subsection shall apply to 
        all aspects of advertising, including television, radio and 
        videotaped advertisements, print advertisements in 
        publications, newsletters and fliers, advertisements on 
        computer programs and on the internet, and advertisements by 
toll-free telephone numbers.''.
    (b) Conforming Amendments.--Section 184(c) (15 U.S.C. 1667c(c)) is 
amended by striking ``subsection (a)'' each time it occurs and 
inserting ``subsection (a)(1)'' and in paragraph (1) by striking 
``paragraphs (1) and (2)'' and inserting ``subparagraphs (A) and (B)''.

SEC. 5. ALTERNATIVE LEASE DISCLOSURES.

    Section 184(c) (15 U.S.C. 1667c(C)) is amended--
            (1) by striking ``Radio'' in the subsection heading and 
        inserting ``Broadcast'';
            (2) by striking ``radio broadcast'' each place it occurs 
        and inserting ``radio or television broadcast'';
            (3) in paragraph (1)(A), by striking ``paragraphs (1) and 
        (2)'' and inserting ``subparagraphs (A), (B), and (F) of 
        subsection (a)(1)'';
            (4) in paragraph (2)(A)(iii), by striking ``provide the'' 
        and inserting the following: ``provide a recorded message which 
        provides, in a uniform manner and in a form which is easily 
        understood and capable of being repeated, the'';
            (5) in paragraph (2)(A), by striking ``and'' at the end of 
        clause (ii), by striking the period at the end of clause (iii) 
        and inserting ``; and'', and by adding after clause (iii) the 
        following:
                    ``(iv) exclude from the information provided by 
                such toll-free telephone all marketing and sales 
                promotional information.''; and
            (6) by amending paragraph (2)(B) to read as follows:
                    ``(B) Written information.--A toll-free number 
                established in accordance with subparagraph (A) shall 
                include an option that permits consumers to request the 
                information required to be provided under subparagraph 
                (A)(iii) in written form and by mail.''.

SEC. 6. ADVERTISEMENT FOR AUTOMOBILE LEASE.

    Section 184 (15 U.S.C. 1667c) is amended by adding at the end the 
following:
    ``(d) Advertisement for Automobile Lease.--
            ``(1) Certain practices prohibited.--No advertisement to 
        promote or assist, directly or indirectly, any lease for an 
        automobile shall--
                    ``(A) state that no downpayment is required on the 
                lease when the lessor requires a capitalized cost 
                reduction payment, acquisition fee, vehicle trade-in or 
                other significant payment upon initiation of the lease, 
                except that payment of the first monthly payment on the 
                lease and any refundable deposit shall not be 
                considered a downpayment; and
                    ``(B) include the amount of any monthly or periodic 
                payment, downpayment, lease term, interest rate, or 
                other terms of leases that the lessor--
                            ``(i) does not routinely or customarily 
                        offer or make available to customers, or does 
                        not intend to make available generally to 
                        customers as part of any offer or promotion, 
                        for vehicles of the same make, model and year 
                        as the vehicle advertised; or
                            ``(ii) makes available only to selected 
                        customers or to customers with preferred credit 
                        ratings.
            ``(2) Lease payment amounts.--
                    ``(A) An advertisement to promote a lease for an 
                automobile that states a lease payment amount, or must 
                state a lease payment amount under subsection 
                (a)(1)(D), shall calculate such payment amount on the 
                basis of a lease payment formula which the Board shall 
                set forth in regulation and which shall be based on the 
                following information--
                            ``(i) the total capitalized cost of the 
                        vehicle model advertised which shall not be 
                        reduced or adjusted by any down payment amount, 
                        capitalized cost reduction, vehicle trade-in 
                        amount or other required payment;
                            ``(ii) a lease term of twenty-four (24) 
                        months; and
                            ``(iii) a mileage allowance of 24,000 
                        miles, or 12,000 miles for each year of the 
                        lease term, before any excess mileage charge 
                        may be imposed.
                    ``(B) An advertisement to promote a lease for 
                personal use of an automobile that states a lease 
                payment amount for a vehicle model as provided under 
                subparagraph (A) shall state clearly and conspicuously 
                that the stated lease payment amount applies to a 
                consumer lease with a term of twenty-four (24) months, 
                with no downpayment or trade-in amount and with an 
                annual mileage allowance of 12,000 miles.
                    ``(C) An advertisement to promote a lease for an 
                automobile that states a lease payment for a vehicle 
                model as provided under subparagraph (A) may state a 
                lease payment amount for the same vehicle model that is 
                different than that required to be stated under 
                subparagraph (A): Provided, however, That--
                            ``(i) the lease payment amount is not 
                        presented more prominently than the lease 
payment amount required to be stated under subparagraph (A); and
                            ``(ii) the advertisement clearly and 
                        conspicuously identifies the lease terms or 
                        payment amounts that explain the difference 
                        between the lease payment amount and the 
                        payment amount required to be stated under 
                        subparagraph (A).''.

SEC. 7. AVAILABILITY OF WRITTEN INFORMATION.

    Section 184 (15 U.S.C. 1667c), as amended by section 6, is amended 
by adding at the end the following:
    ``(e) Availability of Written Information.--
            ``(1) Advertised leases.--In connection with any 
        advertisement by an automobile dealer to promote or assist a 
        consumer lease for an automobile that includes a lease payment 
        amount, as provided in subsection (d)(2), or any national or 
        regional advertisement to promote an automobile lease or 
        vehicle promotion that includes a lease payment amount and that 
        the dealer participates in and offers to consumers, such dealer 
        shall--
                    ``(A) provide separately for each automobile which 
                is promoted in such advertisement or promotion a 
                statement that is dated and typed or set in type and 
                that sets out accurately and in a clear and conspicuous 
                manner a summary of the relevant payment amounts and 
                other terms applicable to the advertised lease or 
                vehicle promotion that shall include--
                            ``(i) a description of the vehicle model 
                        advertised, including any accessory or option;
                            ``(ii) a statement of the charges, fees and 
                        payments to be included in the capitalized cost 
                        of the vehicle model advertised, and the total 
                        capitalized cost of the vehicle model;
                            ``(iii) the total number of scheduled lease 
                        payments;
                            ``(iv) the information used to calculate 
                        any advertised monthly lease payment amount, 
                        which shall include fees or charges not 
                        included in the vehicle capitalized cost, 
                        interest charges and vehicle residual value; 
                        and
                            ``(v) the total amount due at lease 
                        inception, including all charges or fees to be 
                        paid at or before lease signing and upon 
                        delivery of the leased automobile; and
                    ``(B) make such statement available for review by 
                the public by--
                            ``(i) placing such statement in a 
                        conspicuous and prominent location in the 
                        dealership; and
                            ``(ii) providing a copy of such statement 
                        to any customer who requests it.
            ``(2) Customer incentives.--An automobile dealer engaged in 
        automobile leasing shall make available to the public in a 
        conspicuous and prominent location in the dealership a 
        statement that is dated and that sets out clearly and 
        accurately for each vehicle model offered by the dealer, as 
        applicable, the incentives, special offers or promotions 
        available for the benefit of consumers in conjunction with 
        consumer lease, purchase and installment credit transactions, 
        that shall include--
                    ``(A) special interest rates that are offered by 
                automobile manufacturers, financial institutions and 
                leasing companies;
                    ``(B) special incentives, including cash rebates 
                and vehicle residual percentages that are offered by 
                automobile manufacturers directly to consumers; and
                    ``(C) special incentives and lease terms, including 
                vehicle discounts, residual value percentages and other 
                vehicle promotions that are offered to consumers by the 
                dealer.''.

SEC. 8. DEFINITIONS.

    Section 184 (15 U.S.C. 1667c), as amended by sections 6 and 7, is 
further amended by adding at the end the following:
    ``(f) Clearly and Conspicuously.--
            ``(1) In general.--For purposes of this section, the term 
        `clearly and conspicuously' means--
                    ``(A) in print advertisements, the required 
                disclosures and explanations of lease terms shall 
                appear in type size, shade, contract, prominence, and 
                location as to be readily noticeable, readable, and 
                comprehensible to an ordinary consumer;
                    ``(B) in the video portion of television or 
                videotaped advertisements, the required disclosures 
                shall appear on the screen in a type size, shade, 
                contrast, prominence, and location and for a duration 
                as to be readily noticeable, readable, and 
                comprehensible to an ordinary consumer;
                    ``(C) in the audio portion of television, 
                videotaped, and radio advertisements, the required 
                disclosures shall be delivered in a volume, cadence, 
                and location and for a duration as to be readily 
                noticeable, hearable, and comprehensible to an ordinary 
                consumer; and
                    ``(D) in advertisements on the internet, the 
                required disclosures shall appear in a type, size, 
                shade, contract, prominence, and location as to be 
                readily readable and comprehensible to users and shall 
                be separated from marketing and promotional information 
                and easily accessible under the label or heading 
                `Important Information for Consumers'.
            ``(2) Limitation.--Nothing contrary to, inconsistent with, 
        or in mitigation of, the required disclosures shall be used in 
        any advertisement in any medium and no audio, video, or print 
        technique shall be used that is likely to obscure or detract 
        significantly from the communications of the disclosures.''

SEC. 9. ADMINISTRATIVE ENFORCEMENT.

    Chapter 5 of the Consumer Credit Protection Act is further amended 
by adding the following new section:
``Sec. 187. Administrative Enforcement
    ``Compliance with section 184 of this Chapter shall be enforced by 
the Federal Trade Commission, except to the extent that enforcement of 
the requirements imposed under such section is specifically committed 
to another agency under section 108(a) of this title. For purposes of 
the exercise by the Commission of its functions and powers under the 
Federal Trade Commission Act, a violation of section 184 shall be 
deemed an unfair or deceptive act or practice in violation of that Act. 
All of the functions of and powers of the Commission under the Federal 
Trade Commission Act are available to the Commission to enforce 
compliance by any person with such section, irrespective of whether 
that person is engaged in commerce or meets any other jurisdictional 
tests in the Federal Trade Commission Act, including the power to 
enforce the provisions of such section in the same manner as if the 
violation had been a violation of a Federal Trade Commission trade 
regulation rule.''

SEC. 10. CIVIL LIABILITY.

    Section 130(a)(2) of the Truth in Lending Act (15 U.S.C. 1640) is 
amended by striking ``or'' at the end of subparagraph (A), by inserting 
``or'' at the end of subparagraph (B), and by adding after subparagraph 
(B) the following:
            ``(C) in the case of calculating the total civil liability 
        for violation of any requirement of chapter 5, the liability 
        under this subparagraph shall not be greater than $10,000;''.

SEC. 11. REGULATIONS.

    The Federal Reserve Board, not later than 6 months after the date 
of the enactment of this Act, shall issue regulations to implement the 
amendments made by this Act. The Board shall also issue regulations, 
together with staff commentary if appropriate, to update and clarify 
the requirements and definitions for lease disclosures and any other 
issue relating to consumer leasing to carry out the intent of the 
amendments made by this Act, to implement any initiative to prevent the 
circumvention of the amendments made by this Act, and to facilitate 
compliance with the requirements in the amendments.
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