Well, you do not have to be concerned about home solicitation sales unless you are a seller or a finance company that purchases installment sales contracts that are originated as home solicitations—also known as “door-to-door sales.” Might that be you—sometimes?
Since the early 1970's, there has been a Federal Trade Commission Trade Regulation Rule addressing sales of goods and services made at the home of the consumer or at certain other “temporary” locations. With certain exceptions, such a transaction invokes the Rule.
The Rule mandates compliance requirements:
- A Notice of Right to Cancel must be included in the sales contract.
- Then, an actual Notice form must be furnished to each consumer buyer at the time the consumer signs the contract or otherwise agrees to buy the goods or services.
- The contract may not be negotiated, transferred, sold or assigned to a finance company or other third party prior to midnight of the fifth business day following the execution of the contract. [I'll bet you didn't remember this five business day requirement, did you!]
There are some important exclusions:
- The Rule does not apply to vehicle sellers at auctions or tent sales provided that the seller has a permanent place of business.
- The Rule does not apply to sellers of arts or crafts sold at fairs or similar places.
Failing to abide by this Rule constitutes an unfair or deceptive act or practice under the Federal Trade Commission Act. The penalties for violating the FTC Act in connection with this Rule can be substantial—as much as $40,000.
Practice Pointer: If a finance company intends to purchase installment sales contracts originated from sales transactions involving door-to-door sales, it is important to review and evaluate the installment sales contract form and Notice used in the transactions for compliance with the Door-to-Door Sale Rule.