1. Sales Made Outside of a Business
2. Loans With You Home as Collateral
3. Mail and Computer Orders
4. What Consumer Laws Can Protect You?
5. How to Protect Yourself: The Cooling-Off Rule

A 3 day right to cancel involves a number of federal laws that are referred to as cool-off rules that give signers the right to cancel a contract after a few days of signing them. There are many types of contracts that this three day right to cancel can apply to including:

  • Door-to-door contracts
  • Trade show sales
  • Home equity loan contracts
  • Delayed internet or mail order payments

Certain state laws allow the three day cancellation period for specific types of contracts including:

  • Fitness club memberships
  • Dating programs
  • Weight loss memberships

Sales Made Outside of a Business

The three day right to cancel contract was written by the Federal Trade Commission under the cool-off rule which allows signers the right to cancel before midnight of the third business day. This applies to contracts or sales including:

  • Door-to-door sales contracts that exceed $25 if the product or service are for the intended purpose of the family, household, or personal use.
  • A contract that is at least $25 when sold to the customer at any other location besides their primary business such as a tradeshow. This rule does have some exceptions including car auctions, art fairs, and when purchasing insurance and securities.

Loans With You Home as Collateral

According to the federal laws governing Truth in Lending Act, you have three days to cancel a contract by midnight on the third day if it was signed for a:

  • A loan to improve your home
  • Another mortgage on your home
  • Any loan which allows you to use your house as security aside from the original mortgage

When signing your contract you should be made aware by your lender of your rights to cancellation and should receive a cancelation form when you receive your loan documents. The three day period can be extended to as long as three years on special circumstances

Mail and Computer Orders

When ordering goods through your telephone, computer, or catalog mail order, your rights to cancellation will fall under the FTC's phone of mail order verbiage. This rule requires that your goods be shipped when the seller states or if not stated within 30 days. When a seller cannot meet the original ship date, they are required to provide you with a new ship date. If you do not respond it is assumed that you are in agreement with the new date.

If the seller cannot meet the new deadline, then they must send another date giving you the option to cancel or accept the new ship date. When the seller cannot meet this date, a third ship date will need to be set, and another notice sent. On this round, if the customer does not agree to the new ship date the order will be canceled and the money promptly refunded.

What Consumer Laws Can Protect You?

Other contracts are often covered under the state consumer protection laws that have been put in place. These laws will often allow the cancellation or refund of goods within three days of signing the original contract. Many states include this law for such contracts as:

  • Health and fitness club memberships
  • Timeshare property purchases
  • Dance or gymnastic lessons
  • Weight loss programs
  • The purchase of hearing aids

How to Protect Yourself: The Cooling-Off Rule

To protect yourself from entering into a contract you may later regret, always make sure to check the contract or verify state laws about the cooling-off period for your state. Some states such as Florida allow a three day cooling off period on any contract that includes services that will be rendered on a continuing basis in the future. You also will have the right to cancel a contract for future services if you will no longer be able to receive them physically or the services are not what was originally offered.

It is also important to note that many contracts which include future consumer services, the selling company is responsible with providing a written notice of the buyer's right to cancellation.

There are exceptions to general cooling-off rules and if you are unsure of whether or not you will have the right to cancel your contract, you can contact consumer's agencies such as the Attorney General's Office.

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