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What is the 3 Days Cooling off Rule?

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Under the Federal Trade Commission's Cooling Off Rule, a consumer has until midnight of the third business day after a contract was signed to cancel either of the following:

  • door-to-door sales contracts for more than $25

  • contract for more than $25 made anywhere other than the seller's normal place of business-for instance, at a sales presentation at a hotel or restaurant, outdoor exhibit, computer show or trade show.

However, certain transactions do not fall under the Cooling-Off Rule, such as 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

There is also a federal law called the Truth in Lending Act, which lets a consumer cancel a home improvement loan, second mortgage or other loan where the consumer pledged his or her home as security (except for a first mortgage) until midnight of the third business day after the contract was signed. If you order goods by mail, phone, computer or fax (other than photo development, magazine subscriptions, seeds or plants), the Federal Trade Commission's Mail or Telephone Order Rule requires that the seller ship to you within the time promised or, if no time was stated, within 30 days. There is also a Truth in Leasing Act, but it does not cover apartment leases, only to personal property leased by an individual for a period of more than four months for personal, family, or household use.


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