BBB answers questions about FTC’s 3-day Cooling-Off Rule

By Steve Abel – President-BBB | March 1, 2014

There are many misconceptions about the Federal Trade Commission three-day cooling off rule. Frequently Better Business Bureau receives telephone calls or emails asking, “I just purchased a car and I want to return it, don’t I have three days?” Here is a reminder of where and when this rule applies:If you buy something at a store and later change your mind, you may not be able to return the merchandise. But if you buy an item in your home or at a location that is not the seller’s permanent place of business, the FTC’s Cooling-Off Rule gives you three days to cancel purchases of $25 or more. Under the Cooling-Off Rule, your right to cancel for a full refund extends until midnight of the third business day after the sale. Currently, the Cooling Off Rule provides that it is unfair and deceptive for sellers engaged in “door-to-door” sales valued at more than $25 to fail to provide consumers with disclosures regarding their right to cancel the sales contract within three business days of the transaction. {{more}}The FTC is proposing to increase the $25 exempted dollar amount to $130. This increase would reflect cumulative inflation since the Commission originally adopted the Rule in the early 1970s.The Cooling-Off Rule applies to sales at the buyer’s home, workplace or dormitory; or at facilities rented by the seller on a temporary or short-term basis, such as hotel/motel rooms, convention centers, fairgrounds and restaurants. The Cooling-Off Rule applies even when you invite the salesperson to make a presentation in your home.Under the Cooling-Off Rule, the salesperson must tell you about your cancellation rights at the time of sale. The salesperson also must give you two copies of a cancellation form and a copy of your contract or receipt. The contract or receipt should be dated, show the name and address of the seller, and explain your right to cancel. The contract or receipt must be in the same language that’s used in the sales presentation.There are some exceptions: Some types of sales cannot be canceled even if they do occur in locations normally covered by the Rule. The Cooling-Off Rule does not cover sales that are:• Under $25• For goods or services not primarily intended for personal, family or household purposes. • Made entirely by mail or telephone• The result of prior negotiations at the seller’s permanent business location where the goods are sold regularly• Needed to meet an emergency. Suppose insects suddenly appear in your home, and you waive your right to cancel• Made as part of your request for the seller to do repairs or maintenance on your personal property . Also exempt from the Cooling-Off Rule are sales that involve:• Real estate, insurance, or securities; • Automobiles, vans, trucks, or other motor vehicles sold at temporary locations, provided the seller has at least one permanent place of business; • Arts or crafts sold at fairs or locations such as shopping malls, civic centers, and schools. To cancel a sale, sign and date one copy of the cancellation form. Mail it to the address given for cancellation, making sure the envelope is post-marked before midnight of the third business day after the contract date. Sundays and federal holidays are not considered business days. Because proof of the mailing date and proof of receipt are important, consider sending the cancellation form by certified mail so you can get a return receipt. Or, consider hand delivering the cancellation notice before midnight of the third business day. Keep the other copy of the cancellation form for your records.If the seller did not give cancellation forms, you can write your own cancellation letter. It must be post-marked within three business days of the sale. You do not have to give a reason for canceling your purchase. You have a right to change your mind.Start with Trust®. Check out the business with BBB before doing business. Before giving any company your personal or financial information, review the business at bbb.org and remember, if an offer seems too good to be true, it probably is.