Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC amends Cooling-Off Rule to increase exclusionary limit for door-to-door sales, (Jan 6, 2015)

By Linda O’Brien, J.D., LL.M.

A final amendment to the Cooling-Off Rule that increases the exclusionary limit for certain “door-to-door” sales has been approved, the FTC announced today. The Cooling-Off Rule was designed to prevent unfair and deceptive practices in sales that occur outside a seller’s permanent place of business. The Rule previously provided that it is unfair and deceptive for sellers engaged in “door-to-door” sales valued at more than $25 to fail to provide consumers with disclosures regarding their right to cancel the sales contract within three business days of the transaction.

Under the final rule, the revised definition of “door-to-door sales” distinguishes between sales at a buyer’s residence and those at other locations. The revised definition retains coverage for sales made at a buyer’s residence that have a purchase price of $25 or more and increases the purchase price to $130 or more for all other covered sales at temporary locations. The changes will become effective March 13, 2015.

In retaining the $25 limit for in-home sales, the Commission stated that the rulemaking record reflected significant concern about high-pressure sales tactics and deception that can occur during in-home solicitations. Because the sellers’ practices did not appear to be as problematic when sales were made away from consumers’ homes, the FTC concluded that raising the value to $130 for those sales would reduce compliance burdens for sellers while still protecting consumers who make purchases from sellers located in temporary locations.

The final rule amendment follows the FTC’s notice in December 2012 proposing to increase the exclusionary limit to account for inflation.

The Commission vote approving the Federal Register Notice amending the Rule was 5-0, with Commissioner Julie Brill issuing a concurring statement. Brill wrote separately in order to voice her strong support for retaining the exclusionary limit for sales in consumers’ homes; to note her skepticism of the need to raise the exclusionary limit for sales in a seller’s transient location; and to encourage states to engage in detailed fact finding before raising any exclusionary limits under their own cooling-off laws and rules.

News: ConsumerProtection FederalTradeCommissionNews