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What is the cool off Rule for FTC?

Understanding the FTC’s Cooling-Off Rule

The Federal Trade Commission’s (FTC) Cooling-Off Rule gives consumers up to 3 business days to cancel purchases of $25 or more under certain circumstances. This rule is designed to protect consumers from high-pressure and deceptive sales tactics.

When Does the Cooling-Off Rule Apply?

The Cooling-Off Rule applies to sales made at locations other than the seller’s permanent place of business. This includes sales made in your home, at a hotel or motel room, at a convention center, at your workplace, or at a dormitory lounge.Some types of sales are exempt from the Cooling-Off Rule even if made away from the seller’s permanent location. These include:

• Sales under $25
• Sales made entirely online, by mail, or telephone
• Sales of real estate, insurance, or securities
• Automobile sales
• Sales made at auto auctions
• Craft shows and fairs

So in summary – the Cooling-Off Rule lets you cancel purchases of $25 or more, made in person away from the seller’s permanent place of business, with some exceptions.

How the 3-Day Cooling-Off Period Works

The cooling-off period gives you 3 business days to cancel the purchase for a full refund. This is to give consumers time to review the documents and reconsider major purchases made under pressure.The 3 days are counted starting from the day after the sale is made, regardless of weekends or holidays. So if you made a purchase on Monday, you would have until Thursday to cancel.To cancel the purchase, you must provide written notice to the seller before midnight of the third business day. This is usually done by certified mail with return receipt to have proof it was sent. The notice must include enough details to identify the sale being cancelled.Once the seller receives the cancellation notice, they have 10 days to refund your money.

What Kinds of Sales Does This Rule Apply To?

The Cooling-Off Rule is meant to protect consumers from high-pressure sales tactics and misleading claims made during in-person solicitations.Some examples of sales covered under this rule include:

• Door-to-door sales
• In-home demonstrations
• Sales presentations at hotels or private clubs
• Timeshare sales
• Sales at temporary locations like booths at festivals

These types of sales often use tactics to pressure consumers into making major purchases on the spot before they have time to think it over. The cooling-off period allows you to cancel if you later change your mind.

Exceptions to the Cooling-Off Rule

While the Cooling-Off Rule covers many types of high-pressure sales, there are some exceptions where it does not apply:

• Online sales – Any sales made entirely online are not covered, even if over $25. This includes online marketplaces like eBay or Amazon. However, online sales that are preceded by in-person solicitations may be covered.
• Automobiles – Car sales are exempt from the Cooling-Off Rule, even if made away from the dealership. However, timeshare sales promising free or very cheap vacations that are tied to sitting through a timeshare presentation are covered.
• Real estate – Real estate and rental sales do not fall under the Cooling-Off Rule.
• Insurance – You do not have a cooling-off period to cancel new insurance policies. However, some states have laws requiring a 10-30 day free look period.
• Securities – The purchase or sale of securities, commodities, and franchises do not have a cooling-off period.
• Arts and crafts fairs – Vendors selling at these temporary events are exempt.

So while the Cooling-Off Rule protects consumers from many overly aggressive sales tactics, keep these exceptions in mind.

Your Responsibilities Under the Cooling-Off Rule

To successfully cancel a purchase under the Cooling-Off Rule, you must:

• Carefully review all sales documents provided at the time of sale
• Send written notice of cancellation before midnight of the third business day
• Return any goods delivered in substantially similar condition within 20 days of cancellation

You are responsible for the care and return of any goods received during the cooling-off period. If the products are damaged, you may be charged a restocking fee or denied a full refund.And note that even if the Cooling-Off Rule applies, sellers are not required to provide refunds if you simply change your mind or find a better deal elsewhere. You must specifically state you are cancelling due to the Cooling-Off Rule.

How to Cancel Under the Cooling-Off Rule

To properly cancel a covered purchase, follow these steps:

• Carefully review the cancellation forms and sales documents provided by the seller. These should explain the cancellation process.
• Write a cancellation letter before midnight of the third business day following the sale. Address it to the seller and include:
  • Your name
  • Address
  • Copy of sales receipt
  • Date of transaction
  • Description of goods or services purchased
  • Reason for cancelling
• Send the cancellation notice by certified mail or courier that provides tracking and proof of delivery. Keep a dated copy for your records.
• Expect a full refund including any shipping or down payments within 10 days after the seller receives your cancellation notice.

Following these instructions shows you are making a good faith effort to cancel under the Cooling-Off Rule. If the seller then fails to issue a refund, you can submit an official complaint to the FTC.

How to File a Complaint About Cooling-Off Rule Violations

If a seller fails to honor your cancellation rights under the Cooling-Off Rule, you can submit an official complaint to the FTC. Here’s how:

• Go to FTC.gov and click “Report Fraud”
• Choose “Cooling-Off Rule Violation” and fill in the online complaint form
• Include copies of all sales documents, cancellation letter, and certified mail receipt
• Note if goods were returned and any refund denied

The FTC reviews all complaints submitted and works to track down the seller. However, they cannot guarantee consumers will get their money back if the seller refuses refunds.Having detailed records is critical to show you properly cancelled under the Cooling-Off Rule. This increases the chance of getting help recovering your money back, either from the seller or by suing in small claims court.

Key Takeaways About the Cooling-Off Rule

The Cooling-Off Rule is an important protection for consumers making major purchases away from a seller’s permanent location. Key things to keep in mind include:

• It allows 3 business days to cancel purchases over $25
• The cancellation period starts the day after the sale
• Written notice must be provided by certified mail before midnight of the third business day
• Online, car, and real estate sales are exempt
• Consumers must carefully follow cancellation instructions
• Violations can be reported to the FTC with proper documentation

Understanding these Cooling-Off Rule basics allows you to confidently make purchases covered under it, knowing you have time to cancel if you change your mind or feel pressured during the sale.

Resources

Here are some additional resources about the Cooling-Off Rule:

• Cooling-Off Rule – Consumer Information – FTC overview
• Door-to-Door Sales and the Cooling-Off Rule – Article from Nolo on how the rule applies to in-home sales
• Cancelling a Sale – Tips from USA.gov on sending proper cancellation notices
• Free Look Period For Insurance – Investopedia article explaining free look periods for insurance