California Extends Cancellation Period for Senior Citizens under certain “Door-to-Door” Contracts

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Come January 1, 2021, senior citizens in California will be afforded additional cancellation rights when entering into contracts negotiated or executed away from typical business establishments. AB-2471, which Governor Newsom signed into law at the end of September 2020, provides greater protections to senior citizens by extending from three to five business days the right of persons 65 years of age and older to cancel certain consumer contracts. In doing so, California joins other states who have expanded protections beyond those offered under the FTC’s Cooling Off Rule to those aged 65 or older.

The bill applies to home solicitation contracts, home improvement contracts, PACE assessment contracts, service or repair contracts, and seminar sales contracts and amends existing California law that requires cancellation notices for these transactions. Sponsors of the bill reported that some senior citizens may have difficulty understanding complex financial transactions or may be vulnerable to high-pressure sales tactics, particularly if they occur in the senior’s home, and may need more time to consult with family members or others about the implications of their financial decisions. Sponsors further noted that these transactions often occur in non-traditional business environments, such as at the consumer’s home or during a seminar, where there is an increased risk of unfair or predatory business practices such as high-pressure or intimidating sales tactics or intentional miscommunications regarding the terms of the written contract. The bill seeks to protect senior citizens from entering into a contract they misinterpret, do not fully understand, or would simply not choose to enter into in a traditional setting by providing an additional two days for seniors to review a contract before the right to cancel terminates.

Companies doing business in California and engaging in transactions for which they must currently provide consumers with a right to cancel under California law should carefully review their cancellation notices and related practices to confirm they comply with the new law. Likewise, we note that the Department of Financial Protection and Innovation may give priority to protection of senior citizens when exercising its expanded UDAAP authority under newly-enacted AB-1864.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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