FTC Approves Changes to Cooling-Off Rule

For Your Information

The Federal Trade Commission has approved a final amendment to its Cooling-Off Rule that increases the exclusionary limit for certain “door-to-door” sales. The Cooling-Off Rule previously provided that it is unfair and deceptive for sellers engaged in “door-to-door” sales valued at more than $25 to fail to provide consumers with disclosures regarding their right to cancel the sales contract within three business days of the transaction.

Under the final rule, the revised definition of “door-to-door sales” distinguishes between sales at a buyer’s residence and those at other locations. The revised definition retains coverage for sales made at a buyer’s residence that have a purchase price of $25 or more, and it increases the purchase price to $130 or more for all other covered sales at temporary locations.

In retaining the $25 limit for in-home sales, the Commission stated that the rulemaking record reflected significant concern about high-pressure sales tactics and deception that can occur during in-home solicitations. Because the sellers’ practices did not appear to be as problematic when sales were made away from consumers’ homes, the Commission concluded that raising the value to $130 for those sales would reduce compliance burdens for sellers while still protecting consumers who make purchases from sellers located in temporary locations. 

The final rule amendment follows the Commission’s December 2012 notice proposing to increase the $25 limit to $130 to account for inflation. 

The Commission vote approving the Federal Register Notice amending the Rule was 5-0, with Commissioner Julie Brill issuing a concurring statement. The changes will become effective March 13, 2015. (FTC File No. P087109; the staff contact is Sana Chriss, FTC Southeast Region, 404-656-1364)

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