The Federal Trade Commission’s Three-Day Cooling-Off Rule

THE FEDERAL TRADE COMMISSION has a three-day cooling-off rule which lets you cancel, in person or by mail, several kinds of contracts, until midnight of the third business day after the contract was signed.5 You must be given notice of the right to cancel and a cancellation form when you sign the contract. If you were not given a form, ask the seller to send you one. Your cancellation right extends until the seller sends it to you, even if it takes months.

The contracts you can cancel are:

• door-to-door sales contracts for more than $25;

• a contract made anywhere other than the seller's normal place of business for instance, at a sales presentation at a friend's house, hotel or restaurant, outdoor exhibit, computer show or trade show;

• a home improvement loan, second mortgage or other loan where you pledge your home as security (except for a first mortgage or first deed of trust);

• a contract to join a health club;

• a contract to join a discount buying club for example, where you send one penny for 10 records, tapes or compact discs and need only buy 10 more in the next three years at the regular price; and

• a contract to join a membership campground.

After cancelling, the seller must refund your money within 10 days. Then, for door-to-door sales, the seller must either pick up the items purchased, or reimburse you within 20 days for your expense of mailing the goods back to the seller (many states give the seller 40 days). If the seller doesn't come for the goods or make an arrangement for you to mail them back, you can keep them. If you send them back but aren't refunded for your mailing costs, you can sue the seller in small claims court. The seller may keep 5% of the sales amount as a "cancellation fee", not to exceed $25 in Georgia and not to exceed the down payment in Wyoming


516C. F.R.§ 429.1.

Revised Code of Georgia Annotated § 10-1-6; Wyoming Statutes Annotated § 40-12-104.


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MONEY TRO UBLeI

State

Code

Section

Additional State Protections For Contracts 1 Covered by The FTC’s Three-Day Cooling-Off Rule I

Alaska

45.02.350

Buyer has until midnight of 5th business day to cancel door-to-door sales contract for sales of $10 or morel

Arizona

44-5002

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation. I

California

CC 1689.7

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation, 1

District of Columbia

28-3817

Buyer has 15 days to cancel health club contract. 1

Delaware

6-4404

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation. 1

Georgia

10-1-393.2

Buyer has 7 days to cancel health club contract.

Hawaii

481C-2

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation 1

486N-6

Buyer has 5 days to cancel health club contract.

Iowa

82.2

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation

Kansas

50-640

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation. 1

Maine

33-589

Buyer has 7 days to membership camping contract.

Massachusetts

93-48

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation.

New Mexico

57-12-21

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation, i

New York

PP 428

Notice of cancellation and contract for door-to-door sales must be in same language as oral presentation. ■

Mississippi

75-83-5

Buyer has 5 days to cancel health club contract.

North Carolina

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