[Federal Register Volume 59, Number 73 (Friday, April 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9133]


[[Page Unknown]]

[Federal Register: April 15, 1994]


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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