The 3-Day Right to Cancel: How the FTC Cooling-Off Rule Works for Sales Made at Your Home

What the Cooling-Off Rule Is

The Cooling-Off Rule protects you from impulse purchases made outside a seller’s usual place of business. It gives you time to think about a purchase and decide if it’s right for you. This rule does not cover home sales under $25. It also does not cover sales under $130 made at a temporary location, like a hotel or convention center. The rule gives you until midnight of the third business day after the sale to cancel it.

How to Count the Three Business Days

It’s important to know how the “three business days” are counted. A business day includes every day except Sundays and federal holidays. Saturday counts as a business day under this rule.

Here are some examples from the Federal Trade Commission (FTC):

• If you make a purchase on a Monday, and there are no federal holidays that week, you have until midnight on Thursday to cancel.
• If you make a purchase on a Monday, and Tuesday is a federal holiday, you have until midnight on Friday to cancel.
• If you make a purchase on a Friday, and there are no federal holidays on the following Monday or Tuesday, you have until midnight on Tuesday to cancel.
• If you make a purchase on a Friday, and the following Monday is a federal holiday, you have until midnight on Wednesday to cancel.

Always check your calendar for federal holidays when counting your three business days.

Your Seller’s Responsibilities

When you make a purchase covered by the Cooling-Off Rule, the seller must give you certain paperwork. You should receive two copies of a cancellation form. This form will have the seller’s name and address. The seller must also give you a copy of your contract or receipt at the time of the sale. This paperwork should clearly explain your right to cancel.

How to Cancel Your Purchase

To cancel your purchase, you must take action before midnight of the third business day after the sale. Here’s how the Federal Trade Commission (FTC) suggests you do it:

1. Use the cancellation form: Take one copy of the cancellation form the seller gave you. Sign and date it.
2. Mail it: Send the signed and dated form to the address provided on the form for cancellations. Make sure it is postmarked before midnight of the third business day.
3. If you don’t have a form: If the seller did not give you cancellation forms, you can write your own cancellation letter. This letter should clearly state that you are canceling the purchase. Make sure it is also postmarked within three business days of the sale.
4. Keep records: The FTC suggests sending your cancellation by certified mail with a return receipt requested. This provides proof that you sent the cancellation and that the seller received it. Always keep a copy of the signed cancellation form or your cancellation letter for your own records.

You do not need to give any reason for canceling your purchase.

What Happens After You Cancel

Once you have properly canceled your purchase, the seller has certain duties. According to the Federal Trade Commission (FTC):

• Within 10 days: The seller must cancel and return any check you signed. They must refund all your money. They also need to return any property you traded in as part of the purchase. The seller must also tell you if they will pick up any product you still have or if they are abandoning it.
• Within 20 days: The seller must pick up the items left with you. If you agree to send the items back to the seller, they must reimburse you for your mailing expenses.

As the buyer, you also have a responsibility. You must make the items available for the seller to pick up. The items should be in the same condition as when you received them. If a seller does not follow these rules after you cancel, you can report them to the FTC and to your state attorney general or local consumer protection agency. Some state laws might offer you even more rights than the FTC rule.

When This Advice May Not Fit

The Cooling-Off Rule is helpful, but it does not cover all sales. This advice may not fit your situation if:

• Your sale was for less than $25 at your home, or less than $130 at a temporary location.
• You bought real estate, insurance, or securities.
• You bought a motor vehicle at a temporary location, if the seller has at least one permanent place of business.
• You bought arts and crafts at a fair.
• You made your purchase online, by mail, or over the phone.
• Your purchase was an emergency and you needed the goods or services right away.
• You completed the sale at the seller’s permanent place of business.
• You asked a seller to visit your home to repair or perform maintenance on your personal property. The rule does not cover the repair or maintenance itself. However, if you buy something extra that goes beyond your original request for repair or maintenance, that additional purchase might be covered.

Always check with your state’s consumer protection agency or attorney general’s office. Your state might have laws that give you more rights than the Federal Trade Commission’s Cooling-Off Rule.