Regulators, striving to make car leasing contracts more understandable, are expected to finish new rules governing consumer disclosures by June.
But consumer education may be just as important as new rules, according to a Federal Reserve Board official.
"Consumers want plain English, while attorneys want every i dotted and t crossed," said Jeanne Hogarth, a senior analyst at the Fed. "How do you write something in understandable language that's specific enough to be legally binding?
"We may have to solve that through consumer education."
The Fed first raised the possibility of new consumer leasing disclosures last September. The proposed changes to Regulation M would require bankers to place 11 items in a separate box on the disclosure form - including the amount due when the lease is signed and the customer's payment schedule.
Indicating the interest and confusion over the plan, the Fed took public comments for three months longer than originally anticipated. By the Feb. 15 deadline, 135 letters had been received.
The agency also took the rare step of conducting focus groups in January to test how well consumers understand various terms used in leasing contracts.
W. Kurt Schumacher, a staff attorney at the Fed, said four consumer focus groups - two in the Los Angeles area and two in the D.C. area - considered "residual value" relevant and understandable. (Residual value is the property's predetermined worth at the end of the lease term).
But consumers did not understand "gross cost," which is the total value of all items included in a lease at closing.
Bankers and consumer groups alike have applauded the Fed for trying to improve Reg M, saying existing terms are vague and confusing, and that important items now too often blend in with other less relevant information.
Highlighting certain disclosures in a separate box will be effective only if the most relevant information is included, argued Nessa E. Feddis, senior federal counsel at the American Bankers Association.
"We agree that important disclosures should be segregated," Ms. Feddis said in her comment letter to the Fed. "However, we caution that the 'Fed box' not become encumbered by too much information. It should be limited to the most salient, meaningful terms."