Changes to the Cooling-Off Rule

Early last month, the FTC announced that it had approved changes to its Cooling-Off Rule. The previous version of the Cooling-Off Rule required door-to-door sellers making sales of $25 or more to provide consumers with disclosures regarding the consumer’s right to cancel the sales contract within three business days of the sale. The new version of the rule has redefined “door-to-door” sales to distinguish between sales made at a consumer’s residence and those at other locations. Under the revised definition, the disclosure requirements for sales of $25 or more at a buyer’s residence remain unchanged from the old rule. However, for all other covered sales at non-residence locations the purchase price has been raised to $130.

Interestingly, when the FTC initially proposed a change to Cooling-Off Rule in 2012, the FTC said it intended to raise the purchase price to $130 across the board. However, during the comment period following the amendment’s proposal, groups like AARP and several Better Business Bureaus presented the FTC with evidence that traveling salesman were continuing to deceive customers for amounts much less than $130. Recognizing this reality, the FTC stated that they choose to retain the $25 limit for in-home sales in the new rule because the “rulemaking record reflected significant concern about high pressure sales tactics and deception that can occur during in-home solicitations.” Based upon the Cooling-Off Rule change, it appears that the FTC still can’t trust a traveling salesman.