Changes to Federal Cooling-Off Rule

The Federal Trade Commission (“FTC”) has amended its Cooling-Off Rule, a regulation enacted to address unfair and deceptive sales practices conducted at consumers’ homes or locations other than the seller’s place of business. The law typically allows the consumer three days to rescind a contract or cancel certain purchases made door-to-door or at temporary locations if the sale is over $25. Effective March 13, 2015, the law will raise the purchase amount for sales made at temporary locations to $130. The purchase amount for home sales will remain at $25.

While the law is being amended, the main provisions of the law remain the same. Under the law sellers must:

• inform consumers about their cancellation rights at the time of the sale
   
• provide two copies of a cancellation form (one to keep and one to send to the seller)
   
• give a copy of the contract or receipt

In addition, the contract or receipt must be dated, show the name and address of the seller, explain cancellation rights, and be in the same language that is used in the sales presentation.

Consumers should keep in mind that federal and state laws regarding cooling-off laws may vary. Always check with local regulatory agencies for specific information regarding these rules. Also, carefully read and make sure you understand any contract or agreement for service prior to signing it and paying any money. It may be difficult to back out of the deal so it is best to be sure about the purchase before making a decision.

Visit the BCA resource guide on cooling-off rules for more information.