The Federal Trade Commission’s Cooling-Off Rule gives buyers until midnight of the third business day after a sale to cancel many purchases made at home or at a temporary sales location. The rule covers home sales of $25 or more and sales of $130 or more at places such as hotel rooms, convention centers and fairgrounds. A buyer who cancels in time gets the money back.
The FTC describes the rule as protection for sales made away from a seller’s permanent place of business, including at a buyer’s home, workplace or dormitory. It exists because pressure sales happen fast, and a signature on the spot can feel like a trap. The cancellation right gives the buyer three days to think it over, with no reason needed.
Where the dollar lines are
The thresholds differ by location. According to the FTC’s consumer advice page, home sales under $25 are not covered, and sales at temporary locations under $130 are not covered. A sale at or above those amounts qualifies, if nothing else excludes it.
The $130 figure came from a rule change published in the Federal Register on January 9, 2015, effective March 13, 2015. It raised the threshold for locations other than the buyer’s residence from $25. The commission kept the $25 line for in-home sales because of concerns about high-pressure and deceptive tactics.
Commissioner Julie Brill backed keeping $25 for sales inside the home. In a separate statement she said she was skeptical about raising the limit for transient locations and urged states to gather local evidence before changing their own thresholds. The federal figure for hotels, fairgrounds, restaurants, workplaces and dormitory lounges is $130.
The three days are short, so the paperwork matters. A buyer who never received the cancellation form should still write a letter, date it and send it by certified mail within the window, as the FTC advises.
For anyone who signed a contract after a salesperson’s visit, the date is what matters most. Count the business days from the sale, including Saturdays but not Sundays or federal holidays. If the third business day has not ended, the buyer can still cancel.
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What the seller has to hand over
The seller must give notice of the right to cancel at the time of sale. The FTC says that means two copies of a cancellation form and a dated copy of the contract or receipt. The paper must show the seller’s name and address and explain the cancellation right, in the same language used in the sales pitch.
The Federal Register notice says the seller must give both written and oral notice of the right to cancel within three business days of the transaction. A seller that skips the notice is breaking the rule. The FTC says failing to give it is treated as an unfair and deceptive practice.
How to cancel and what comes back
To cancel, the buyer signs and dates one copy of the cancellation form and mails it. If no form was given, a letter works. The FTC says to send it by certified mail, postmarked within the three-day window, and to keep the receipt.
The seller then has 10 days to cancel any check the buyer signed, refund the money and return any trade-in property. It must also say whether items the buyer still has will be picked up or left behind. Within 20 days, the seller must pick the items up or reimburse the cost of mailing them back.
The buyer has a duty too. Any items the seller delivered must be kept available in similar condition. The FTC warns that a buyer who does not may remain responsible for payment under the contract.
Sales the rule does not reach
Many purchases are outside the rule. The FTC’s list excludes sales under the dollar limits, sales made entirely online, by mail or by phone, and sales completed at the seller’s permanent place of business. It also excludes emergency purchases, real estate, insurance and securities.
Other exclusions include goods or services not mainly for personal, family or household use, though instruction and training courses are covered either way. Work a buyer asked for on personal property is outside the rule, but items bought beyond the request are covered. Vehicles sold at temporary locations by a seller with a permanent business are excluded, and so are arts and crafts sold at fairs, malls, civic centers and schools.
The FTC’s 2012 announcement of its rule review shows how long the three-day idea has been in place. The agency first set the $25 figure in the early 1970s and proposed the $130 figure to reflect inflation. Some state laws give more protection than the federal rule, the FTC says, so the state attorney general’s office is worth a call.
Anyone who thinks a seller broke the rule can report it to the FTC at ReportFraud.ftc.gov, to the state attorney general and to the local consumer protection agency. The open question for a buyer is usually the clock, since a letter postmarked on day four is too late.
Signed a contract at the kitchen table this week?
The cancellation window closes at midnight of the third business day, and a form mailed late leaves the contract standing. After that, the problem moves to the bank, where an unwanted charge may need a written dispute.
50 Letters to SSA, IRS, Banks & Insurers is a 113-page set of fill-in letters. It does not replace the FTC’s cancellation form. It covers the bank side, with bank letters: frozen accounts, unauthorized transfers, card disputes, a revoked power of attorney, and with every letter: when to send it, where, the deadline and what to enclose.
Get the 50 fill-in letters for card disputes and bank problems after a door-to-door sale →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
