WASHINGTON, May 14, 2017 – We have all made purchases that, within a very short period following, we have regretted. Our gut was aching badly. Does the line “my spouse is going to kill me” sound familiar? Was it “too much car” for your needs? Or was the monthly payment too high?
For some reason, the urban legend that “any contract can be cancelled for any reason within three days” lives on.
Yet despite common belief, you cannot return the lamp you bought at the garage sale, you cannot return the used lawnmower you bought on Craigslist, and you cannot cancel the steak you ordered at the restaurant when it arrives when nothing was actually wrong with it.
Yes, there are consumer protection laws that permit the cancellation of transactions for up to three days after the transaction is completed. There is much confusion and misunderstanding, however, about when a consumer has a right to cancel or rescind a transaction, and when a consumer does not.
Consumer protection law actually applies to very few purchases. But most people have an erroneous understanding of what transactions are covered by “the right of rescission.”
Rescission laws were passed in the 1970s as a response to commonly employed high-pressure sales tactics. The best example was the door-to-door encyclopedia salesman who would come to your house and explain why you needed to buy World Book or that other popular, multi-volume tome, the Encyclopedia Britannica. The sales guy would get in the door, and, as many experienced decades ago, would not leave the premises until the homeowner agreed to make the purchase. (No one said “I’ll wait for the Internet” to find out more about the product.)
Remember that episode of the television show Friends, where Joey bought only the “V” volume of the encyclopedia set from the salesman who was in his home trying to sell him the entire set?
Ultimately, pressure sales tactics resulted in the passage of laws giving consumers a “cooling off” period during which they could cancel certain transactions and get their money back.
The Federal Trade Commission’s (FTC’s) Cooling-Off Rule gives consumers a 3-day right to cancel a sale made in their home, workplace or dormitory or at a seller’s temporary location (such as a hotel room, convention center, fairground or restaurant). Even then, certain types of sales cannot be cancelled, even if they take place in places normally covered by this Rule. A few of these include transactions under $25; sales under $130 made at temporary locations; and sales made entirely online, by mail or by telephone.
The cooling off period provided under this rule is particularly important today for the heavily-solicited elderly, who are prone to enter into unfavorable deals with high-pressure salespeople.
When a consumer borrows money to purchase a home, there is no right to cancel the lending agreement. On the other hand, when money is borrowed to refinance a home, or obtain “cash out” refinances, home equity loans or credit lines, there is a three-day cooling-off period during which the loan may be canceled. Because of this law, in fact, the borrowed funds are not delivered until the three-day period passes.
Gyms, Health Spas, Health-Clubs, Weight-Loss Centers, Self-Defense Schools
Some states regulate these facilities precisely because many of their salespeople make great promises to prospective customers to induce them to sign up. “Nobody will bother you and you will lose half your body weight when you eat our food, trust our counselor, and work-out only three times per week with our Master Trainer.”
“Remorse laws,” where they exist, allow cancellation of the contract if certain conditions apply. Rule number one, regardless of any law, is to use common sense before you sign anything. Make sure you read the contract, paying particular attention to the “term” and the “cancellation” provisions. One month’s written notice should be the way to cancel. Pay only monthly, regardless of the length of the contract. See the tips below for buying a car and apply them to these facility memberships.
Cars, Planes and Trains, Lions, Tigers and Bears
Oh my. Okay, only cars. In a word, after you buy a car, you CANNOT return it or change your mind, unless there is fraud, or unless the car is a lemon. There is no cooling off period or right to rescind with regard to car purchases.
Fraud is often hard to prove in a car purchase situation. Most car dealers’ contracts have a clause that says something like “the agreement between buyer and seller is entirely based on the paperwork signed by both parties,” or, “this contract represents the entirety of the agreement and no verbal promises or representations will be enforceable if not reduced to writing and signed by both parties.”
Meaning: The car salesperson can say anything and make any promise, such as “we don’t charge for that.” When the contract shows they do charge for that, guess which party wins and has the force of law in their favor? Right. The written contract controls.
In automobile purchase transactions, the term “lemon” is defined differently in different states. Generally, you must give the dealer a certain minimum number of attempts to repair a chronic, recurring problem before you can invoke a state’s lemon laws enabling you to return the car and get a refund.
Herewith (a legal term meaning “Okay, here we go”) are some tips for buying a car:
- Read the entire contract before signing it, and ask questions. If something was said that is not in the contract or if what is in the contract is different than what was said, insist the matter be included in the contract and stated correctly.
- Get your auto loan approved in advance at a bank before going to the dealership. When you get to the dealership, your conversation will be about the price of the car, not the monthly payment, interest rate, discount, or rebate. All you have to do is negotiate on the price of the car.
- Do not trade in your old car at the dealer. The dealer will always give you a good price on your trade-in and make up for it on some other aspect in the price of the car you are buying. Sell your car on Craigslist, at CarMax, or someplace else. You will almost always get more.
- Negotiate on the “out of the door” price. Do not negotiate on plus or minus the MSRP (manufacturer’s suggested retail price), or dealer invoice. What is the final price number? Insist on having only this conversation.
- Do you really want a good price? You must comparison shop. And yes, it is much more time consuming.
Give yourself time when buying a car, and be ready to walk away from any deal. This means do not go to a dealership to buy a car if your current car just died if you are stressed for time, if you want to get home to see the game on TV, before you are moving into a new house, or after a long day’s work. Also, enjoy a nice meal before going to a dealership. If you are hungry, you will make bad decisions.
Once you have agreed on a price, know that the dealer is going to try to get you to use their financing and encourage you to purchase add-ons such as an extended warranty, undercoating, or some type of anti-theft device. All these will be overpriced, and all of them can be purchased later. Say “no” to all of these offers and make out your check for only the “out of the door” price.
Finally, one positive thing: Some states actually have laws (known as “regret laws”) that allow consumers to back out of the purchase of the extended warranty part of the deal.
How much is the doggie in the window?
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website.
His book “The 8 Critical Things Your Auto Accident Attorney Won’t Tell You” can be instantly downloaded, for free, on his website: http://www.samakowlaw.com/book.
Samakow has now also started a small business consulting firm. The website for this business is brand new and Mr. Samakow will be most appreciative of any and all comments. www.thebusinessanswer.com.