[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4540 Introduced in House (IH)]

  2d Session
                                H. R. 4540

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

                              May 25, 2000

 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 Improvement Act of 2000''.
    (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 
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 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) 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.
            ``(3) The requirements of this subsection shall apply to 
        all advertisements for a consumer lease, including 
        advertisements on television, radio and videotape; print 
        advertisements in publications, newsletters and fliers; 
        advertisements by toll-free telephone numbers; and 
        advertisements in electronic media, including internet 
        webpages, e-mail, CD-ROMs and interactive computer services.''.
    (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. 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) In general.--An advertisement to promote a lease for 
        an automobile that includes a scheduled lease payment amount 
        that applies only to a single vehicle, or to a limited number 
        of vehicles of the same vehicle make, model and year, shall 
        clearly and conspicuously state that the advertised payment 
        amount applies only to a single vehicle, or shall clearly and 
        conspicuously state the number of vehicles of the same vehicle 
        make and model to be made available for lease at the advertised 
        payment amount.
            ``(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, or such other lease term that the Board 
                        may determine in regulation as representative 
                        of prevailing industry practice; and
                            ``(iii) a mileage allowance before any 
                        excess mileage charge may be imposed of 12,000 
                        miles for each year of the lease term, or such 
                        other annual mileage allowance which the Board 
                        may determine in regulation as providing a more 
                        representative estimate of vehicle use and 
                        potential costs to the consumer.
                    ``(B) 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. 6. AVAILABILITY OF LEASE 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 Information.--An automobile dealer that 
engages in any advertising to promote or assist a consumer lease, or 
that participates in any advertised national or regional promotion for 
a consumer lease, shall make available to the public, as appropriate 
and in such format as the Board shall determine in regulation, the 
following information:
            ``(1) Customer incentives.--A written and dated statement 
        that shall be placed in a conspicuous and prominent location in 
        the dealership 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.
            ``(2) Available leases.--A written and dated statement for 
        each vehicle model that the dealer makes available for lease to 
        consumers that shall be placed in a conspicuous and prominent 
        location in the dealership, and copies of which shall be made 
        available to individual consumers upon request, that sets out 
        clearly and accurately the following terms applicable to leases 
        for such vehicle models--
                    ``(A) the rebates and other incentives available 
                for consumers;
                    ``(B) the money factor, or lease interest factor, 
                that shall be stated as a decimal number and as an 
                equivalent approximate annual percentage rate; and
                    ``(C) the vehicle residual value, that shall be 
                stated as a percentage of the retail price (MSRP) of 
                such vehicle model.''.

SEC. 7. 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 a type size, shade, contrast, 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 promotions and advertising in internet 
                webpages, CD-ROMs, or interactive computer services, 
                the required disclosures shall appear in a type size, 
                shade, contrast, 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 communication of the disclosures.''.

SEC. 8. 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. 9. 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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