As a consumer, you are afforded certain consumer rights when it comes to entering into a contract and having the opportunity to change your mind and cancel. This is referred to as a “cooling off period”. This applies to contracts regarding trade show sales, home equity loans and second mortgages, and automobile purchases. Some laws allow consumers to cancel contracts regarding dating services or gym memberships.

Trade-Show Sales

As part of the Federal Trade Commission cooling off rules, you can cancel a contract by midnight of the third business day after you entered into a contract for the following:

• A contract of $25 or more made in a venue that was not the normal place of business for the seller. The rule does not apply to craft shows, insurance, securities or public automobile auctions.
• A door-to-door contract for $25 or more as long as the services or goods purchased are intended for family, household or personal purposes.

You are allowed to the simple reason of changing your mind as the reason why you want to cancel your contract.

Second Mortgages/Home Equity Loans

Under the same time-frame as before, you’re allowed to cancel a contract for:

• A second mortgage
• A home equity loan
• A loan where your home is pledged as security (excluding a first mortgage)

The lender must advise about your right to cancel and provide you with a cancellation form.

If you are unsure as to whether or not a contract you entered into can be canceled under the “cooling off” laws, contact us.