When is a deal not a deal? If buyer's remorse settles in within a few hours of a major purchase or a signed contract, do you have the right to cancel the deal? If so, for how long?

When The 3-Day Rule Applies

There's a federal law called the "3-Day Cooling Off Rule" which protects consumers from making rash purchases, especially when they might be susceptible to high-pressure sales.

Under this rule by the Federal Trade Commission (FTC), you can cancel a contract that involves:

• a home improvement loan or second mortgage
• any door-to-door sales for $25 or more
• services sold by a door-to-door salesman (like roofing or driveway repair)
• service or goods sold somewhere other than the seller's normal place of business (such as a trade-show)

You have until midnight of the third business day after the contract was signed to notify the seller that you've changed your mind.

When You Don't Have Protection

There's a popular misconception that you can rescind an automobile contract within 3 business days as well, but those purchase (even when made at a car show) are not protected under the FTC's 3-Day Rule.

Other purchases that aren't protected are those that are:

• under $25
• primary mortgages to purchase a home
• items bought at arts and crafts shows
• are made by mail, phone, or over the internet

You do have the right to cancel a purchase made by mail, phone, or internet, however, if the seller doesn't ship the merchandise by the time stated (or within 30 days if no specific date is given).

When You Decide To Cancel

If you decide to take advantage of the 3-Day Rule to cancel a contract that you've come to regret, make sure that you give proper notice to the seller. If you can go to the seller's location (such as a bank), you can usually cancel in person. Just make certain that you get a copy of any paperwork that you sign that cancels the deal.

If you can't cancel in person, send a notice to the seller by mail. Make sure that the notice includes:

• your identifying information (name, address, phone number)
• information identifying the contract you're cancelling (including any order number and a description of the goods or services)
• a statement that you are cancelling the contract (you do not have to state why)

Make sure that you send the notice by certified mail and ask for a return receipt. This provides you with proof that you sent the notice and that it was received.

There are often other laws in place to protect consumers, especially on the state level, so this list is by no means exhaustive. If you've entered into a contract for goods or services and you've come to regret it, there may be another way to terminate the deal. Contact a lawyer to have the contract examined and see what can be done.

For more information, contact Vandeventer Black LLP or a similar firm.

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