Educational Consumer Tips


Author: Better Business Bureau

Although the three-day Cooling-Off Rule has been in effect for quite some time, the Better Business Bureau hears from consumers who are still confused about their rights. Often, they make the mistake of assuming that the rule applies to any purchase they make. This is simply not the case.  

Under the Federal Trade Commission's "Cooling-Off" Rule, you have three business days to cancel any purchase of $25.00 or more that you have made in your home or somewhere other than the seller's usual place of business.  This would include facilities rented by the seller on a temporary or short term basis.  
The "Cooling Off" Rule also provides protection for consumers who purchase items at a product party given in a private home.  

However, as with every rule there are exceptions. The "Cooling-Off" Rule does not apply to:

• sales made at the sellers usual place of business
• sales made totally by mail or phone 
• sales for real estate
• sales for insurance or securities
• sales for emergency home repairs
• sales of automobiles, if the seller has a permanent place of business
• arts and crafts sold at fairs, shopping centers, or schools

The Rule also does not apply to sales that begin as retail transactions at a business establishment, and are completed with the signing of a contract in your home.  For instance, ordering an item at a store and signing the contract when someone from the company comes to your home.

In cases where the Rule does apply, the seller should give you the proper cancellation forms along with any contract or receipt pertaining to the sale. The date of the sale should be noted on the cancellation form. If the seller did not provide a cancellation form, you can write your own cancellation letter, but remember it must be post-marked within three business days of the sale. 

If you decide to cancel the sale, sign and date the cancellation form. Mail or deliver a copy to the address given for cancellation anytime before midnight of the third business day after the date of the contract. Also, keep a copy for your personal records. Since proof of the date you mailed the cancellation form to the company is important, send it from the post office via certified mail with a return receipt requested. You do not need to give a reason for the cancellation.

Once you have cancelled, the seller has ten days to cancel and return any promissory note or other negotiable instrument you signed; refund all your money and tell you whether any product you still have will be picked up; and return any trade-in. 

If you received any goods from the seller, you must make them available to the seller in as good condition as when you received them. If you do not make the items available to the seller--or if you agree to return the items but fail to--you remain obligated under the contract.

To avoid having to cancel a purchase, be sure to completely read and understand the contract before you sign on the dotted line.