As a direct selling company, you need to know about the Federal Trade Commission’s Cooling-Off Rule. There are very specific steps you must follow to be in compliance with this federal law.
It’s All About Changing Your Mind
If a customer buys something at a store and later changes his or her mind, the merchandise may not be returnable. However, if an item is purchased in one’s home or at a location that is not the seller’s permanent place of business, the customer by federal law may have the option to return the item for a refund.
The Federal Trade Commission’s (FTC’s) Cooling-Off Rule gives people three days to cancel purchases of $25 or more. Under the Cooling-Off Rule, one’s right to cancel for a full refund extends until midnight of the third business day after the sale. By law, Saturday is a business day but Sunday is not. In Alaska, by state law, one has five business days to cancel and request a refund.
The Cooling-Off Rule applies to sales at the buyer’s home, workplace or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds, and restaurants. The Cooling-Off Rule applies even when you invite the salesperson to make a presentation in your home.
It Applies To Your Company
Simply put, the Cooling-Off Rule applies to sales made by your company and its independent representatives.
Under the Cooling-Off Rule, the salesperson must tell the customer about the cancellation rights at the time of sale. The salesperson also must give the purchaser two copies of a cancellation form (one to keep and one to send) and a copy of your contract or receipt. The contract or receipt should be dated, show the name and address of the seller, and explain the right to cancel. The contract or receipt must be in the same language that’s used in the sales presentation. There are specific rules regarding the right to cancel wording and the font size.
How To Comply
Most direct selling companies comply with the Cooling-Off Rule by asking their independent representatives, when conducting a sale in person, to provide the purchaser with two copies of the receipt, onto which the back of each page is printed the “right to cancel” clause required by federal law.
If you don’t know this wording, contact me at Sylvina Consulting (Jay {at} sylvina.com) and I will email it to you.
Jay Leisner, the President of Sylvina Consulting, is a top compensation plan and direct selling expert, a trusted adviser to new and established network marketing and party plan companies. For more than 30 years, Jay has enjoyed assessing and improving network marketing, party plan and referral marketing companies across the globe.
irwin palacio says
Very Informative