Consumer Rights: The Cooling Off Rule
What is the “Cooling-Off Rule” for Consumers?
The Federal Trade Commission’s (FTC’s) “Cooling-Off Rule” allows a consumer to return an item that was purchased at a location that is not the seller’s permanent physical place of business. For example, if the item was purchased at your home, the Cooling-Off Rule allows 3 days you to return your purchase or cancel a signed contract. The sale must involve a purchase or contract worth $25 or more.
The right to cancel extends until the midnight of the third business day after the completion of the sale. The Cooling-Off Rule is a form of consumer protection and is frequently applied to companies that operate through door-to-door sales. The Rule does not apply to purchases made at the seller’s permanent place of business.
When does the Cooling-Off Rule apply?
The FTC’s Cooling-Off Rule applies to any sales made at the buyer’s home or place of residence, workplace, or dormitory. It also applies in situations where the seller rents facilities on a short term basis. For example, if the sale was made at a convention center, hotel, or fairgrounds, you will have 3 days to return the product or cancel the contract. The Rule even applies if you have invited the salesperson to conduct the sale at your home.
What Type of Notification should I be given if the Cooling-Off Rule applies?
According to the Cooling-Off Rule, the seller is required to inform you of your rights to cancellation at the time of the sale. They must also provide you with two copies of a cancellation form, one for sending, and the other for your records. You must also be given a copy of your receipt and/or contract.
The receipt or contract should include a date, as well as the name and address of the salesperson. The receipt must also clearly explain your cancellation rights. The language in the receipt or the contract should be the same as that used in the sales transaction or presentation.
Are there any Exceptions to the Cooling-Off Rule?
Yes- the Cooling-Off Rule does not apply if:
- The sale or contract is for less than $25
- The goods or services will not be used primarily for personal, household, or family purposes
- The transaction was conducted entirely by phone or mail
- The transaction was primarily the result of a prior negotiation at the seller’s physical business location
- The sale is for goods or services needed to remedy an emergency
- The sale was made in connection with your request that the seller perform maintenance or repairs on your property
The Cooling-Off Rule does not apply to purchases involving insurance, securities, or real estate. Sales of automobiles and other motor vehicles are also exempt if the seller has at least one permanent location for business sales. Also, the Rule does not apply to crafts or arts that are sold at temporary locations such as fairgrounds.
How do I Cancel a Sale or Contract under the Cooling-Off Rule?
If the Cooling-Off Rule applies to your purchase, you should completely fill out the cancellation notices that were provided to you at the time of the sale or contract signing. Mail one of them to seller, and keep the other copy for your records. Be sure that your mailing is post-marked before the midnight of the 3rd business day after the sale (Sundays and Federal holidays are not business days).
Once you cancel the sale or contract, the seller has 10 days to finalize the cancellation and provide you with a refund or exchange product. They also have 20 days from the date of cancellation to pick up the cancelled purchase or to provide a reimbursement, including any mailing expenses for the return.
What if the Seller has violated the Cooling-Off Rule?
A seller may violate the Cooling-Off Rule if they fail to provide a receipt or fail to inform you of your cancellation rights. Violations may also occur if they fail to cancel an order or provide you with reimbursements. If a violation has occurred, you may be entitled to reimbursement for the product, and possibly for any losses associated with the seller’s violation. The seller could also potentially be liable under breach of contract rules.
Do I Need a Lawyer for Transactions involving the Cooling-Off Rule?
The Cooling-Off Rule is an important mechanism for protecting consumer rights, and any violations may result in legal consequences. If your consumer rights have been violated under the Cooling-Off Rule, you may wish to contact a lawyer for advice. Your attorney may be able to help you obtain compensation for the violation, and possibly for other resulting losses.
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Last Modified: 03-22-2011 11:40 AM PDT
