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What is the “three day rule”?

What does the three day rule cover?

The three day rule is also called the  “Cooling Off Rule.”

This rule covers  sales contracts made in person at your home, work, or other unusual locations.

The rule is to protect people against being pressured into a sale, contract, or deal.

Some of these may involve people who go door to door to try to get people to buy things or services.

The rule applies to the following sales contracts:

• A sale of $25 or more done at your home
• A sale of more than $130 at a temporary place (like a flea market, tent, roadside, etc.)
• But the sale must be for goods or services mainly for your personal, family, or household use. This includes sale of lessons, other instruction or training courses.

However, this rule does NOT cover the sale if it was:

• made to meet any emergency
• made entirely online, by mail, or telephone
• made after you agreed to the terms at the seller’s permanent place of business that sells the goods or services you bought
• made because you asked the seller to visit your home to repair or perform maintenance on your personal property.  (Things you buy other than that repair or maintenance request are covered.)
• involves any real estate, insurance, or securities (like stocks)
• for a car, van, truck, or other motor vehicle sold at a temporary location, if the seller has at least one permanent place of business
• for any arts or crafts sold at fairs or places like shopping malls, civic centers, and schools

What information must the seller tell you?

At the time of the sale, the seller has to tell you about your right to cancel the sale.

The seller also must give you:

• Two copies of a cancelation form. One copy is for you to keep. The other copy is to send to the seller if you decide to cancel your purchase.
• A copy of your contract or receipt. The contract or receipt should be dated, show the name and address of the seller, and explain your right to cancel.
  • Note: The contract or receipt must be in the same language that was used in the sales presentation.

When can I cancel the contract?

Your right to cancel for a full refund lasts until midnight of the third business day after the date the sale was made or you signed the contract.  Saturday is considered a business day, but Sundays and federal holidays are not. So:

• If the sale happens on a Monday in a week without a federal holiday, you have until midnight on Thursday to cancel.
• If the sale happens on a Monday and Tuesday is a federal holiday, you have until midnight on Friday to cancel.
• If the sale happens on a Friday, you have until midnight on Tuesday to cancel, if there are no federal holidays on Monday or Tuesday.
• If the sale happens on a Friday and the following Monday is a federal holiday, you have until midnight on Wednesday to cancel. 

Do I need a reason to cancel the sale?

You don’t have to give a reason for canceling.

You have a right to change your mind.

How do I cancel the sale?

• To cancel a sale, sign and date one copy of the cancellation form. Mail it to the address given for cancellations in the contract or by the seller.  Make sure the envelope is postmarked before midnight of the third business day after the contract date.
• If the seller didn’t give you cancellation forms, write a cancellation letter. It must be postmarked within three business days of the sale.
• Send the cancellation form or letter by certified mail or another post office service that includes “tracking” so you can get a report showing when you mailed it and when it was delivered.    Also, keep a copy of the letter or cancelation form or letter for your records.

What happens next?  What does the seller have to do after the cancelation?

The seller has 10 days to

• cancel and return any check you signed
• refund all your money
• return any property you might have traded in
• tell you if any product you still have will be picked up or abandoned

Within 20 days, the seller must either pick up the items left with you, or reimburse you for mailing expenses if you agree to send back the items.

If the seller gave you any items, you must make them available to the seller in as good condition as when you got them. If you don’t make the items available to the seller — or if you agree to return them but don’t — you still have to pay the seller.

What if the seller does not follow the rules?

If you used a credit card, you can dispute the credit card charges based on the violation of the “FTC Cooling off rule.” See our post on this here.

You can also report the violation the FTC at ReportFraud.ftc.gov.

In some cases you may be able to use the violation as part of a lawsuit.