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Understanding the FTC Cooling-Off Rule

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Frozen Ice CubesThere you are, minding your own business watching TV, when there’s a knock at the door. You open the door and discover it’s some kid selling magazine subscriptions, or a person selling the latest product fad (Sham Wow? Snuggies?), and they go into the hard sell pitch trying to get you to buy one. You tell them no but they are persistent and eventually, either because you’re sick of dealing with them or something about the Snuggie intrigues you, you buy it. When the door closes and the salesperson is gone, you’re angry because you just spent money on something you didn’t really want.

Fortunately the FTC has your back with the Cooling Off Rule.

The cooling off rule gives you three days to cancel purchases of $25 or more and you have until midnight on the third business day to request the refund if you made the purchase outside of where the business is normally conducted. For example, if you walk into a Snuggie Store and buy a Snuggie because you had a mental lapse, that’s not covered by the Cooling Off Rule because Snuggies are normally sold in a Snuggie Store. If you are accosted by a Snuggie Store Salesperson on the street, then you can initiate the cooling off rule and get a refund in three days.

Exception

There are exceptions to the rule, outlined in a Facts for Consumer bulletin published by the FTC, and they are:

  • are under $25;
  • are for goods or services not primarily intended for personal, family or household purposes. (The Rule applies to courses of instruction or training.);
  • are made entirely by mail or telephone;
  • are the result of prior negotiations at the seller’s permanent business location where the goods are sold regularly;
  • are needed to meet an emergency. Suppose insects suddenly appear in your home, and you waive your right to cancel;
  • are made as part of your request for the seller to do repairs or maintenance on your personal property (purchases made beyond the maintenance or repair request are covered).

There are also exemptions – including 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; and arts or crafts sold at fairs or locations such as shopping malls, civic centers, and schools.

How to Cancel

The salesperson is supposed to give you a cancellation form, which you simply have to mail in by certified mail (so you have a dated receipt) within three business days (Saturday is a business day, Sunday and federal holidays aren’t). If no form was provided, write your own letter and mail it within three days.

If you run into any problems, you can contact your local Consumer Protection Office or write the Consumer Response Center:

Consumer Response Center
Federal Trade Commission
Washington, DC 20580

Have you ever used the Cooling Off Rule for anything?

(Photo: stevendepolo)

{ 14 comments, please add your thoughts now! }

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14 Responses to “Understanding the FTC Cooling-Off Rule”

  1. Thanks for sharing this, but marketers rely on people being too lazy or busy to use these protections. It is the same with mail-in rebates– the claims percentages are extremely low. Most people just don’t want to be bothered.

    • Jim says:

      I think it’s important to remember these protections in case you ever are screwed and are looking for recourse. I understand what you mean about marketers and mail in rebates, there’s certainly a bit of human psychology involved, but it’s always good to know that something can be done if you want to.

  2. Thanks for the tip. I never realized that such a cooling off period even existed for these types of things.

    Its funny, that many consumers do not realize that there is a cooling off period for magazines and snuggies but automatically assume that their is a cooling off period for automobiles.

    A few states may offer an auto cooling of period but the overwhelming vast majority do not.

    It makes you wonder why we offer a cooling period for relatively inexpensive products but not for a product that we’ll be paying off for the next 3,4, or even 5 years.

  3. lostAnnfound says:

    This is good information to know. Sometimes these door-to-door or telephone sales people hit you at the time of day when it is pretty busy namely around the time everyone is getting home & dinner time when you are all distracted & busy and can be easily talked into something you don’t want.

  4. I’ve never personally used the cooling off period but I did buy a magazine subscription from a pushy sales-kid a couple years ago. I’m a softy.

  5. Jace says:

    Does this apply to flea market / fair vendors? Not sure a transient fairground would be considered “permanent business location” but most of the stuff you get suckered into (ShamWow) are sold at these events.

  6. Eric says:

    I wonder how many people actually use this..

  7. Patrick says:

    Thanks for letting us know about this Jim. I hate pushy salesmen and especially when I come out of a situation with crap I don’t want.

  8. jillianlou says:

    “The salesperson is supposed to give you a cancellation form” – wow, really?! Has anybody ever actually experienced this??

  9. MoneySmart says:

    Cool, I didn’t know such a rule existed. Right after I got married I bought something from a door to door sales guy, my wife was so mad at me… too bad I didn’t know about this rule then :)

  10. thomas says:

    Ugh, door to door salesmen, debt collectors… you really are on a roll writing about scum!

    I have no problems looking that kid in the eye and telling them no.

  11. Shock says:

    Does this apply to the hard sell timeshare pitches you get at resorts that offer a free massage in exchange for your “time”?

  12. bobbi says:

    This is a rule I learned the hard way after being royally scammed by a car dealer. It is an outdated rule for the housewife who was bombarded with door to door salesmen. The problem is no longer door to door salesman, but, the places with permanent locations who are allowed to lie, trick, smooth talk and whatever it takes to separate you from your money. They are more and more brazen in their deceptive practices because it is too hard to take them to court. Finding a lawyer you can work with is expensive and time consuming. They already have their lawyers. I was tricked into believing they had a white/gold with sunroof coming in for me on Tues. I said, “I’ll come back Tues.” they said,” No, We want you to drive the car. We want you to make sure this is the one you want.” Monday morning they registered the black car to me. That made it a used car.
    I am trying to get the “no cooling off rule” changed so that consumers will have some protection under the law. Please write your representatives. It is a Federal law. I have yet to learn if there are any states that have some protection. The overwhelming majority think they have 3 days and I would advise you look it up for your state to be sure.


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