The FTC Cooling-Off Rule for Door-to-Door Sales
The Federal Trade Commission's Cooling-Off Rule gives buyers time to change their minds about many purchases made at home. When a buyer agrees to a sale at their front door or in their living room, the rule generally lets them cancel until midnight of the third business day after the sale and get their money back. It also tells the seller exactly what paperwork to hand over and what to say.
This post explains which sales the rule covers, what a seller must do at the time of the sale, what happens when a buyer cancels, and which sales are excluded. It follows the text of the rule, which is published at 16 CFR Part 429. It is general information, not legal advice, and state laws can add to it. For the other rules a sales program works under, see permits, hours, and do-not-knock rules.
What the Cooling-Off Rule is
The Cooling-Off Rule is a federal trade regulation. Under it, a seller that fails to follow its requirements in a covered sale commits an unfair and deceptive practice. The rule exists because a sale made at someone's home, often after a visit the buyer did not expect, gives the buyer less time to compare and think than a purchase made in a store.
The rule does not ban door-to-door selling and does not require a permit. It gives the buyer a right to cancel, and it requires the seller to explain that right in writing and out loud.
Which sales the rule covers
The rule calls a covered sale a "door-to-door sale," but its definition is wider than knocking on doors. It covers a sale, lease or rental of consumer goods or services, meaning things bought mainly for personal, family or household use, when all of the following are true.
- The seller or the seller's representative personally asks for the sale, including when the buyer invited them.
- The buyer agrees to buy somewhere other than the seller's place of business, such as the buyer's home, the buyer's workplace or a dormitory lounge, or a location rented for a short time, such as a hotel room, convention center, fairground or restaurant.
- The purchase price is $25 or more for a sale at the buyer's home, or $130 or more for a sale at another such location.
The purchase price includes all interest and service charges, and the threshold applies whether the sale is made under one contract or several.
What the seller must do at the time of the sale
When the buyer signs the contract or agrees to buy, the seller must do four things.
- Hand over a completed receipt or contract. It must show the date of the sale and the seller's name and address, and it must be in the same language used in the sales presentation. If the rep presented in Spanish, the paperwork must be in Spanish.
- Include the cancellation statement. Next to the buyer's signature line, or on the front page of the receipt if there is no contract, in bold type of at least 10 points, the document must carry a statement in substantially this form: "You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right."
- Hand over two copies of a cancellation form. The seller must give the buyer a completed form, in duplicate, titled "Notice of Cancellation" or "Notice of Right to Cancel." Before handing it over, the seller fills in its name, the address of its place of business, the date of the sale, and the date by which the buyer may cancel, which can be no earlier than the third business day after the sale.
- Tell the buyer out loud. The seller must orally inform the buyer of the right to cancel at the time the buyer signs or buys.
The contract may not include any waiver of the right to cancel, and the seller may not misrepresent that right in any way.
How the three business days are counted
Under the rule, a business day is any calendar day except Sunday and federal holidays. Saturday counts. The buyer has until midnight of the third business day after the date of the sale.
For example, if a sale is made on a Thursday in a week with no federal holidays, the three business days are Friday, Saturday and Monday, and the buyer may cancel until midnight on Monday. Writing the actual date on the form, as the rule requires, means the buyer does not have to count.
What happens when a buyer cancels
A buyer cancels by mailing or delivering the signed cancellation form, or any other written notice, to the seller by the deadline. Within 10 business days after the seller receives a valid cancellation, the rule requires the seller to do the following.
- Refund all payments made under the contract or sale.
- Return any goods or property the buyer traded in, in substantially as good condition as when the seller received them.
- Cancel and return any negotiable instrument the buyer signed, such as a promissory note, and end any security interest created in the sale.
- Tell the buyer whether the seller intends to pick up any goods already delivered or to abandon them.
The buyer, in turn, must make delivered goods available at their home in substantially as good condition as when received, or follow the seller's instructions to send them back at the seller's expense and risk. If the seller does not pick the goods up within 20 days of the date of the cancellation notice, the buyer may keep or dispose of them with no further obligation.
One more requirement affects financing. The seller may not sell or assign the buyer's note or other evidence of debt to a finance company or other third party before midnight of the fifth business day after the contract was signed.
Sales the rule does not cover
The rule lists several exclusions. It does not apply to the following.
- Sales below the price thresholds: under $25 at the buyer's home, or under $130 at the other locations listed above.
- Sales made after earlier negotiations during the buyer's visit to the seller's permanent retail location, where the goods or services are offered for sale on a continuing basis.
- Transactions in which the buyer already has a right to cancel under a section of the Consumer Credit Protection Act (15 U.S.C. 1635).
- Real emergencies, where the buyer started the contact, needs the goods or services to meet an immediate personal emergency, and gives the seller a separate, dated and signed statement in the buyer's own handwriting that describes the emergency and waives the right to cancel.
- Sales made entirely by mail or telephone, with no other contact between buyer and seller before delivery.
- Repairs or maintenance the buyer specifically asked the seller to come and do. Extra goods or services sold during that visit, other than parts used in the repair, are still covered.
- Sales or rentals of real property, sales of insurance, and sales of securities or commodities by a broker-dealer registered with the Securities and Exchange Commission.
- Motor vehicles sold at auctions, tent sales or other temporary places of business by sellers that have a permanent place of business, and arts or crafts sold at fairs or similar places.
State laws can add to the rule
The Cooling-Off Rule does not replace state law. Many states have their own laws giving buyers the right to cancel a home sale. The federal rule says it does not exempt a seller from complying with those laws, except where a state law gives buyers less protection than the federal rule does. Where a state gives buyers more protection, sellers must meet that state's rule as well. Check the rules in each state where your team sells.
Building the rule into a sales team's routine
- Put the statement and the form into your contract template, in every language your reps present in.
- Train the oral notice as part of the close, so every rep explains the right to cancel the same way.
- Fill in the cancellation date on both copies of the form before handing them over.
- Plan installation or delivery dates with the three-day window in mind.
- Send every cancellation to one person who knows the 10-business-day refund deadline.
Beacon is not a substitute for compliant sales paperwork. It helps with the work around the sale. Reps record each door's result on their phones, set a follow-up appointment from the door screen when a homeowner wants a second visit, and every result is saved with the time and the rep who recorded it. Our page on Beacon for door-to-door sales teams covers how sales teams use it. For the closing conversation where the oral notice belongs, see closing techniques for door-to-door sales, and for whether selling door to door needs a local permit, see is door-to-door canvassing illegal.
Common questions
What is the FTC Cooling-Off Rule?
A federal rule, at 16 CFR Part 429, that generally gives buyers until midnight of the third business day after a sale to cancel sales of $25 or more made at their home, or $130 or more at certain other locations, and requires sellers to explain that right.
Does Saturday count as a business day?
Yes. Under the rule, every day except Sunday and federal holidays is a business day.
Does the rule cover services as well as products?
Yes. It covers consumer goods and services, including leases and rentals, bought mainly for personal, family or household use.
How quickly must a seller refund a cancelled sale?
Within 10 business days after the seller receives a valid cancellation notice.
Can a buyer give up the right to cancel?
Only in a real emergency that the buyer started, using a separate statement in the buyer's own handwriting. A contract may not include a waiver.
Read the rule itself
The full text is short and worth reading before you write your contract template. It is published as 16 CFR Part 429, Rule Concerning Cooling-Off Period for Sales Made at Homes or at Certain Other Locations, in the Electronic Code of Federal Regulations. Try Beacon free for 14 days to keep your team's doors, follow-ups and results in one place.
