FTC’s Cooling-Off Rule

Fox Rothschild LLP

Fox Rothschild LLP

The Federal Trade Commission (FTC) has a “Cooling-Off Rule” that gives consumers a three-day right to cancel a sale made at their home, workplace, or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground, or restaurant. Thus, the Rule applies both to in-home presentations and to in-person seminars and craft shows.  However, there are a number of exemptions, such as sales under $25, sales made online or over the phone, and goods not primarily intended for personal, family, or household purposes.

As explained by the FTC, a seller in these situations must, at the time of sale, provide the consumer specific information and documents alerting the consumer to his or her right to cancel using a cancellation form.  If the consumer cancels, the seller has 10 days to (1) cancel and return any check the consumer signed, (2) refund the consumer’s money and inform the consumer whether any goods in the consumer’s possession will be picked up, and (3) return any trade-in.  The seller also has 20 days to pick up the goods or reimburse for mailing expenses.  If the consumer is returning any goods, the goods should be in as good of condition as when the consumer received them.

If a consumer believes that a company has violated the Cooling-Off Rule, he or she can file a complaint with the FTC.  The FTC also recommends that consumers contact their state Attorney General or local consumer protection agency.  Consumers can also raise complaints with the Better Business Bureau.

As a reminder, the FTC accepts consumer complaints on a wide variety of topics, including these topics provided on the FTC’s website:

  • Identity theft
  • National Do Not Call Registry violations
  • Computers, the internet and online privacy
  • Telemarketing scams
  • Credit scams
  • Immigration services
  • Sweepstakes, lotteries, and prizes
  • Business opportunities and work-at-home schemes
  • Health and weight loss products
  • Debt collection, credit reports, and financial matters

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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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