As it turns out, there is some truth to the old cliché that contracts are made to be broken. But not all contracts, and not all the time. The law recognizes that sometimes the ability to cancel a contract works in the public interest: sometimes a consumer buys a good or service in high pressure, high stress circumstances, and could use a “cooling off” period before truly committing.
As a result, we have a collection of federal and state laws that lists – with specificity – limited types of transactions requiring a cooling off period. (And no, none deal with auto sales.)
Telemarketing, Door-to-Door, Sales Not at Usual Place of Business
Federal Trade Commission regulations deal with the two most common scenarios in which high-pressure tactics are used. Federal law gives consumers three days (72 hours from the time of signature) to cancel a sale for goods or services that was made door-to-door or anywhere other than the seller’s normal place of business.
The regulations do list some exemptions. Insurance and securities sales, craft fairs, and public car auctions are unaffected. Sales under $25 are also exempt (so you can’t return that impulse Girl Scout cookies purchase).
Intrusion is a sales tactic, none more so than telemarketing. The Ohio Telephone Solicitation Sales Act responds accordingly, allowing consumers to cancel a contract made by phone at any time until a written agreement confirms the sale.
Credit Repair, Debt Counseling, Loans and Mortgages
Under the Ohio Credit Services Act, consumers are granted three business days from the time of signature to cancel a contract for for-profit credit repair, as well as debt counseling services. The same is true for home equity loans and second mortgages under the federal Truth in Lending Act.
Ohio’s Prepaid Entertainment Contracts Act allows consumers to cancel certain types of prepaid services within three days of the first lesson or service. Included are: dating services, commercial gyms and health spas, dance and martial arts instruction, and weight loss programs.
If the prepaid service falls within the Act, refunds are awarded on a prorated basis from the first lesson or service. If the seller’s facility closes within 180 days of contracting, or either party moves 25 miles or further from the original facility, the consumer is also entitled to a prorated refund.
Business Opportunity Contracts. The Business Opportunity Purchaser’s Protection Act gives buyers of business opportunity contracts (that is, a contract for the rights to offer, sell, or distribute a product or service) five business days to cancel.
Hearing Aid Purchases. Hearing aid purchasers can return their device for any reason at all within 30 days of receiving it.
These “cooling off” laws require some sellers to inform you about your right to cancel and, in some cases, provide you with a cancellation form. Their failure to do so may extend a buyer’s right to cancel further than the statutory deadline, or the buyer may be able to petition a court to void the contract outright.
Buyers are bound by the rules of law as well. Cancellations must be done in writing, and they must meet strict cancellation deadlines – a “business day” means every day except Sundays and federal holidays; notice by mail is dated when the letter is postmarked.
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