Request for Comments Concerning Rule on Cooling-Off Period for Door-to-Door Sales

FEDERAL TRADE COMMISSION

16 CFR Part 429

Request for Comments Concerning Rule on Cooling-Off Period for

Door-to-Door Sales

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (the ``Commission'') is

requesting public comments on its Rule on Cooling-Off Period for Door-

to-Door Sales (``the Cooling-Off Rule'' or ``the Rule''). The

Commission is also requesting comments about the overall costs and

benefits of the rule and its overall regulatory and economic impact as

a part of its systematic review of all current Commission regulations

and guides. In addition, the Commission is proposing a non-substantive

amendment to the definition of ``business day'' in Note 1(f) of the

Cooling-Off Rule. All interested persons are hereby given notice of the

opportunity to submit written data, views and arguments concerning this

proposal.

DATES: Written comments will be accepted until June 14, 1994.

ADDRESSES: Comments should be directed to: Secretary, Federal Trade

Commission, room H-159, Sixth and Pennsylvania Avenue NW., Washington,

DC 20580. Comments about the Cooling-Off Rule should be identified as

``16 CFR part 429--Comment.''

FOR FURTHER INFORMATION CONTACT:

Louise R. Jung, Attorney, Federal Trade Commission, Washington, DC

20580, (202) 326-2989.

SUPPLEMENTARY INFORMATION: The Commission has determined, as part of

its oversight responsibilities, to review rules and guides

periodically. These reviews will seek information about the costs and

benefits of the Commission's rules and guides and their regulatory and

economic impact. The information obtained will assist the Commission in

identifying rules and guides that warrant modification or rescission.

A. Background

The Rule was promulgated by the Commission on October 26, 1972 (37

FR 22933 (1972)), and amended on November 1, 1973 (38 FR 30105 (1973)),

November 19, 1973 (38 FR 31828 (1973)), and November 10, 1988 (53 FR

45455 (1988)). The Rule makes it an unfair or deceptive act or practice

for sellers of consumer goods or services with a purchase price of

$25.00 or more, who sell away from their places of business, to fail to

furnish to the buyer certain information regarding the buyer's right to

cancel sales within three business days from the date of the

transaction and to give the buyer a full refund of any downpayment upon

the buyer's cancellation.

The Rule requires a seller to furnish the buyer with a completed

receipt or copy of a contract pertaining to the sale with a summary

notice informing the buyer of the right to cancel the transaction. The

Rule also requires the seller to furnish the buyer with a completed

cancellation form in duplicate, captioned either ``Notice of Right to

Cancel'' or ``Notice of Cancellation,'' one copy of which can be

returned to the seller for cancellation.

On November 10, 1988, pursuant to section 18(g)(2) of the Federal

Trade Commission Act,\1\ the Commission granted exemptions to (1)

sellers of arts and crafts at fairs and (2) sellers of automobiles at

temporary places of business who have at least one permanent place of

business.\2\ The Commission found that the record with regard to these

transactions indicated an absence of problems (such as high pressure

sales tactics or misrepresentation as to the quality, price or

characteristics of the product or services offered for sale) associated

with sales made away from the seller's place of business.

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\1\15 U.S.C. 57(a). This section provides that the Commission

may on its own or by petition exempt persons from a rule's

application if it is not necessary to prevent a practice to which

the rule relates. The exemption is effectuated through informal

rulemaking consisting of notice and comment.

\2\53 FR 45455 (1988).

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With the exception of the sales covered by these exemptions, the

Rule continues to apply to sales made ``at a place other than the place

of business of the seller.'' See Note 1(a) to the Rule. Such temporary

places of business can include facilities rented on a temporary and

short-term basis, such as hotel rooms, convention centers, fairgrounds

and restaurants. In addition, sales occurring at other places such as

the buyer's workplace or dormitory lounges are covered by the Rule.

B. Issues For Comment

At this time, the Commission solicits written public comments on

the following questions:

(1) Is there a continuing need for the Rule?

(a) What benefits has the Rule provided to purchasers of the

products or services affected by the Rule?

(b) Has the Rule imposed costs on purchasers?

(2) What changes, if any, should be made to the Rule to increase

the benefits of the Rule to purchasers?

(a) How would these changes affect the costs the Rule imposes on

firms subject to its requirements?

(3) What significant burdens or costs, including costs of

compliance, has the Rule imposed on firms subject to its requirements?

(a) Has the rule provided benefits to such firms?

(4) What changes, if any, should be made to the Rule to reduce the

burdens or costs imposed on firms subject to its requirements?

(a) How would these changes affect the benefits provided by the

Rule?

(5) Does the rule overlap or conflict with other federal, state, or

local laws or regulations?

(6) Since the Rule was issued, what effects, if any, have changes

in relevant technology or economic conditions had on the Rule?

(7) Are sales solicited at a temporary business location, such as a

hotel room, fairground, restaurant, convention center or other such

place rented on a temporary and short-term basis, associated with any

of the following problems?

(a) Deception by the seller in getting the consumer to come to the

temporary location;

(b) High pressure sales tactics;

(c) Misrepresentation as to the quality, price or characteristics

of the product;

(d) High price for low quality merchandise;

(e) The nuisance created by the visit.

(8) Does the likelihood of such problems occurring during sales

solicited at a temporary location differ depending on the following

circumstances?

(a) Whether the sales occur at more traditional retail settings

such as fairgrounds or convention centers as compared to restaurants or

dormitory lounges;

(b) Whether the sales occur at a bona fide auction;

(c) Whether the seller has a permanent place of business, either

locally or elsewhere; or

(d) The type of goods or services sold, such as vacation time

shares or health club memberships that are often the subject of

specific state or local cooling-off laws ore regulations.

(9) Should the Rule continue to apply to sales solicited at a

temporary business location?

(10) Should the current exemption for arts and crafts sold at fairs

and similar places be expanded to include other products, such as

garden equipment, fencing materials and other non-crafts?

(11) Should the current exemption for automobiles sold at auctions,

tent sales and other temporary places of business (provided the seller

has a permanent place of business) be expanded to include other

vehicles, such as pickup trucks, vans, trucks and campers?

C. Proposed Amendment of Definition of Business Day

The Cooling-Off Rule requires sellers, who sell away from their

places of business, to furnish to the buyer certain information

including the buyer's right to cancel the sale within three business

days from the date of the transaction. At Note 1(f) of the Cooling-Off

Rule, a ``business day'' is defined as:

Any calendar day except Sunday, or the following business

holidays: New Year's Day, Washington's Birthday, Memorial Day,

Independence Day, Labor Day, Columbus Day, Veterans' Day,

Thanksgiving Day, and Christmas Day.

The Commission proposes that this definition be amended to refer to

``any federal holiday,'' rather than listing the specific business

holidays. since the Rule's promulgation, the federal Washington's

Birthday holiday has been replaced with the President's Day holiday and

a federal holiday observing Martin Luther King, Jr.'s Birthday has been

adopted. The proposed amendment of the definition of ``business day''

to refer to ``any federal holiday'' would enable the Rule automatically

to take into account any changes in federal holidays and help eliminate

any confusion in the interpretation of ``business day.''

List of Subjects in 16 CFR part 429

Door-to-door sales; Trade Practices.

Authority: 15 U.S.C. 41-58.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 94-9133 Filed 4-14-94; 8:45 am]

BILLING CODE 6750-01-M