The 3-say cooling-off period: Myth and reality
In 2001, I bought some magazine subscriptions from a couple of college students who were selling them door-to-door. I'd had my own miserable experiences trying to sell things to strangers, so I had a policy of buying from any kid who wanted to sell me something.
I let the young man and young woman come into the house, and I listened to their pitch. I browsed through a glossy brochure that listed a bunch of magazines I didn't really want or need. In the end, I agreed to purchase two subscriptions.
But as I was filling out the forms, I began to have second thoughts. Things didn't feel right. Should a subscription to Entertainment Weekly really cost $50 a year?
“I'll be right back,” I said, and I went to my office to google for information about the company selling the magazines. This was during the early days of Google, and information was not quite yet ubiquitous. I wasn't able to find what I needed on short notice.
I bought the subscriptions. The young salespeople thanked me and went on their way.
Later that evening, I did some more research. I found that the prices I was paying for my magazines were nearly double the normal subscription rates. I also found that the company from which I had purchased them had a reputation for flakiness.
I felt like a fool. Fortunately, I had recourse because of the three-day cooling-off rule.
The 3-Day Cooling-Off Period
When you buy something from a store and later change your mind, your ability to return that item is governed by store policy. Some stores, such as Costco, have very liberal return policies — others do not.
But what if you buy a set of steak knives at the county fair? Or purchase an Entertainment book from a co-worker? Or pick up several magazine subscriptions from students selling them door-to-door? In these situations, there's no storefront for returns. But in many cases you still have three business days to cancel the transaction without penalty.
Under the U.S. Federal Trade Commission's cooling-off rule, you have the right to cancel a purchase of $25 or more for a full refund as long as certain conditions are met:
- If you make a purchase entirely by mail or telephone, the rule does not apply.
- When you initiate the sale at the seller's permanent business location, the rule does not apply, even if the deal is closed in your home.
- In order to take advantage of this rule, you must return the item you bought in a condition similar to how you purchased it.
- Despite popular misconception, there is no cooling-off rule for automobile purchases. Make sure you want that car before you buy it.
- In order for the rule to apply, the purchase must be for personal, family, or household purposes.
- This rule isn't applicable to purchases made to meet an emergency, such as a natural disaster or an home insect infestation. Nor does it apply to repairs and maintenance on your personal property.
- There's no three-day cooling off period when you buy real estate, insurance, or securities (such as stocks or bonds). In other words, if you purchase insurance or stocks from a door-to-door salesman, this rule offers no protection.
- You're also not protected if you buy an “arts and crafts” item at a fair, shopping mall, civic center, or school. For example, if you buy a holiday wreath at your child's grade school, there's no cooling-off period.
Be aware that in some instances you'll be asked to sign a document waiving your right to cancel. This document is perfectly legal, and if you sign it, this rule does not apply.
In many cases, the seller will give you cancellation forms when you make your purchase. But even if you don't receive the paperwork, you're still covered. If the seller did not provide cancellation forms, you can write your own cancellation letter. It must be post-marked within three business days of the sale. You do not have to give a reason for canceling your purchase. You have a right to change your mind.
From my experience, businesses that are shady enough that you might need to use this rule (such as the magazine sales outfit from which I bought my subscriptions) can be unresponsive to your requests to cancel. To obtain satisfaction, I had to call upon the Better Business Bureau. The FTC offers some other suggestions:
If you have a complaint about sales practices that involve the Cooling-Off Rule, write: Consumer Response Center, Federal Trade Commission, Washington, DC 20580. The Rule's complete name and citation are: Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations; 16 CFR Part 429.
You also may wish to contact a consumer protection office in your city, county, or state. Some state laws give you even more rights than the FTC's Cooling-Off Rule, and some local consumer offices can help you resolve your complaint.
In addition, if you paid for your purchase with a credit card and a billing dispute arises about the purchase (for example, if the merchandise shipped was not what you ordered), you can notify the credit card company that you want to dispute the purchase. Under the Fair Credit Billing Act, the credit card company must acknowledge your dispute in writing and conduct a reasonable investigation of your problem. You may withhold payment of the amount in dispute, until the dispute is resolved.
You can find complete information about the 3-day cooling off rule at the FTC website.
In 2001, after weeks of waiting, I finally received a refund on my magazine subscriptions. I also learned a valuable lesson. It's one thing to buy candy or from the neighbor kid who is raising money for band camp, but it's another to buy things from young adults I don't even know. This experience forced me to revise my “buy from kids” policy; now I only buy from children I know, or those who live in my neighborhood.
Here are some related articles from the Get Rich Slowly archives:
- How to handle a door-to-door salesman
- Five steps for effective consumer complaints
- The 13 commandments of savvy consumers
Much of the information in this article is taken directly from FTC documents, which are in the Public Domain.