How and When You Are Allowed to Cancel a Sale Under the Cooling Off Rule

There are only certain situations where you can change your mind and cancel a purchase

The Cooling-Off Rule: How and When to Cancel a Sale
Image: NCCC
January 14, 2019

Far too many people are confused about their rights when it comes to cancelling a sale. Some people say you have three days to cancel a sale or return a product for a full refund. Others say seven days. Some will say that you have no right to cancel a sale and that all purchases are final. So what's the truth?

The Cooling Off Rule Allows You to Cancel Some Sales

The Federal Trade Commission's (FTC) Cooling-Off Rule gives you three days to cancel purchases of $25 or more. Under the Cooling-Off Rule, your right to cancel for a full refund extends until midnight of the third business day after the sale only when the sale is conducted at a place other than the retailer's usual place of business or permanent retail location. It applies to sales at the buyer's home, workplace or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants. The Cooling-Off Rule applies even when you invite the salesperson to make a presentation in your home.

If you buy something at a store, car lot or other place where the retailer typically does business and later change your mind, you might be able to return the merchandise. But this will be subjected to the retailer's return policy, not the Cooling-Off Rule.

terms of cancellation must be provided

For sales that fall under the Cooling-Off Rule, the salesperson must tell you about your cancellation rights at the time of sale. The salesperson also must give you two copies of a cancellation form (one to keep and one to send) and a copy of your contract or receipt. The contract or receipt should be dated, show the name and address of the seller, and explain your right to cancel. The contract or receipt must be in the same language that's used in the sales presentation.

Exceptions to the Cooling-Off Rule

Some types of sales cannot be cancelled even if they do occur in locations normally covered by the Cooling-Off Rule. Examples include:

  • are under $25;
  • are for goods or services not primarily intended for personal, family or household purposes;
  • are made entirely by mail or telephone;
  • are the result of prior negotiations at the seller's permanent business location where the goods are sold regularly;
  • are needed to meet an emergency (e.g. pest infestations);
  • are made as part of your request for the seller to do repairs or maintenance on your personal property.

Thee Cooling-Off Rule does not apply to sales that involve:

  • real estate, insurance, or securities;
  • automobiles, vans, trucks, or other motor vehicles sold at temporary locations, provided the seller has at least one permanent place of business;
  • arts or crafts sold at fairs or locations such as shopping malls, civic centers, and schools.

How to Cancel

To cancel a sale, sign and date one copy of the cancellation form. Mail it to the address given for cancellation, making sure the envelope is postmarked before midnight of the third business day after the contract date. (Saturday is considered a business day; Sundays and federal holidays are not.) Because proof of the mailing date and proof of receipt are important, consider sending the cancellation form by certified mail so you can get a return receipt. Or, consider hand delivering the cancellation notice before midnight of the third business day. Keep the other copy of the cancellation form for your records.

If the seller did not give 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.


If You Cancel

If you cancel your purchase, the seller has ten days to:

  • cancel and return any promissory note or other negotiable instrument you signed;
  • refund all of your money;
  • tell you whether any product you still have will be picked up; and
  • return any trade-in.

Within twenty days, the seller must either pick up the items left with you or reimburse you for mailing expenses if you agree to send back the items. If you received any goods from the seller, you must make them available to the seller in as good condition as when you received them. If you do not make the items available to the seller, or if you agree to return the items but fail to, you remain obligated under the contract.

If you run into Problems

If you have a complaint about sales practices that involve the Cooling-Off Rule, contact the Federal Trade Commission and the North Carolina Attorney General's Office.

In addition, if you paid for your purchase with a credit card and a billing dispute arises about the purchase, 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. To protect your rights under the Fair Credit Billing Act, you must send a written notice about the problem to the credit card company at the address for billing disputes specified on your billing statement within 60 days after the first bill containing the disputed amount is mailed to you.