COOLING-OFF RULE CHANGES ANNOUNCED BY FTC

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Approves Changes to Cooling-Off Rule

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.