Make the goods a v ailable to the seller, or if you agree to retur the goods to the seller and fail to do so…

ADVISORY OPIKIONS 1459

MAKE THE GOODS A V AILABLE TO THE SELLER, OR IF YOU AGREE TO RETUR THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIOKS UNDER THE CONTRACT.

TO CANCEL THIS TRA:\SACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS CA:\CELLATION KOTICE OR ANY OTHER WRITTEN NOTICF:, OR SF: D A TF:LEGRAM, TO (NamR of &lwr), AT (Address of seller s place of business) NOT LATER THAN MIDNIGHT OF (datej

I HEREBY CA CF:L THIS TRA:\SACTION.

(Datej

(Buyer s S"igrw.ture)"

II. Obscrvations as to substantive differences: Other provisions of the Rule provide:

(c) Fail, before furnishing copies of the " Notice Cancellation " to the buyer, to compJew both copies by enwring the name of the seHer, the address of the seller place of business, the date of the transaction :n and the date, not earlier than the third business day foJlowing the date of the tram,action, by which the buyer may give notice of canccllation.

(d) Include in any door-to-door contract or receipt any confession of judgement or any waiver of any of the rights to which the buyer is entitled 30 under this Rule including specifically his right to cancel the sale in accordance with the provisions of this Rule.

(e) Fail t.o inform each buyer orally, at the time he signs t.he contract or purchases the goos or services, of his right t.o cancel.

(f) Misrepresent in any manner the buyer s right to cancel.32 (g) Failor refuse to honor any valid notice of cancellation by a buyer and within 10 business days after the receipt of such notice, to (i) refund all payments made under the contract or sale; (ii) return any goos or property traded in , in substantially as good condition as when received by the seller; 33 (iii) cancel and return any negotiable instrument executed by the buyer in connection with the contract or sale 34 and take any action necessary or appropriate to terminate promptly any security interest created in the transaction. 3:\ (h) Negotiate, transfer, sell , or assign any note or other evidence of indebtedness to a finance company or other third party prior to midnight of the fifth business day following the day the contract was signed or the goos or services were purchased. 'IH (i) Fail , within 10 business days of receipt of the buyer s notice of cancellation, to notify him whether the seller intends to repasses or to abandon any shipped or delivered goodS.

1460 FEDERAL TRADE COMMISSIO); DECISIONS

87 F.

(NOTE I: DefinitUm. For the purpses of this Rule the following definitions shaH apply:

(a) Do-to-Do Sale - A sale, 1ea.;;e, or rental of consumer goos or servces with a purchase price of $2,15, or more, whether under single or multiple contracts, in which the seHer or his representative personally soJicits the sale including those in response to or following an invitation by the buyer, and the buyer s agreement or offer to purchase is made at a place other than the place of business of the sel!cr. The tenn "door-tooor sale" does not include a transaction:

(1) made pursuant to prior negotiations in the course of a visit by the buyer to a retail business establishment having a fixed permanent loction where the goos are exhibit€d or the services are offered for sale on a continuing ba.-'_is; 42 or (2) in which the consumer is accorded the right of recision by the provisions of the Consumer Credit Protection Act (15 V. C. U635) or regulations issued pursuant thereto; 43 or

(3) in which the buyer has initiated the contract and the goos or servces are needed tv meet a bona fide immediate personal emergency of the buyer, and the buyer furnishes the seHer with a separate dated and signed personal statement in the buyer handwrting describing the situation requiring immediate remedy and expressly acknowledging and waiving the right to cancel the sale within three business days; 44 or (4) conducted and consummated entirely by mail or telephone; and without any other contact between the buyer and the seller or its representative prior tv delivery of the goods or perfonnance of the services; 45 or

(5) in which the buyer has initiated the contact and specificaJly requested the seller to visit his home for the purpse of repairing or performing maintenance upon the buyer personal property. If in the course of such a visit, the seller sells the buyer the right to receive additional services or goos other than replacement parLo; necessari!y used performing the maintenance or in making the repairs, the sale of those additional goos or services would not fall within this exclusion; 46

(6) pertaining to the sale or rental of real property,47 to the sale of insurance or the saJe of securities or commodities by a broker-dealer registered with the Securities and Exchange Commission.

(b) Co-mer Gos or &'les - Goods or services purchased, lea.o;ed, or rented primarily for personal family, or household purpses , including courses of instruction or training regardless of the purpse for which they are taken. (c) Selwr -. Any person, partnership, corpration, or association engaged in the door-todoor sale of consumer goods or services.

(d) Pl.e of Busness - - The main or permanent branch office or locJ address of a seller.

(e) Purchase ?ria - The total price paid or to be paid for the consumer goos or services, including all interest and service charges

(f) Busness Day - Any calendar day except Sunday, or the following business holidays; New Year s Day, \Vashington s Birthday, Memorial Day, Independence ADVISORY OPINIONS 1461

Day, Labor Day, CoJumbus Day, Veterans' Day, Thanksgiving Day, and Chrstmas Day.)54

IV. Suggestion as to form:

Based upon the previous analysis and the recognition of the substantive differences between the Code and the RuJc, we suggest that the following forms may be considered to be compatible with the Code, the Rule and the appropriate "more favorab1e" provisions:

A. In immediate proxmity to the space reserved in the contract for the signature of the buyers and in boldface type of at least 10 points, the following:

BUYER' S RIGHT TO CANCEL IF THIS AGREEMENT WAS SOLICITED AT YOUR RESIDENCE OR AT A PLACE OTHER THAN THE PLACE OF BUSINESS OF THE SELLER AND YOU DO NOT WANT THE GOODS OR SERVICES , YO!:, THE BUYER MAY CANCEL THIS TRANSACTION BY MAILING A NOTICE TO THF: SELLER AT ANY TIME PRIOR TO MID:-IGHT OF THE THIRD BUSINESS DAY AFTER YO!: SIGN THIS TRANSACTION. THE NOTICE MUST BF: MAILED TO: (name and adress oftlw sellR) SEE THE ATTACHED OTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT. B. Attached to the contract, easily detachable and in boldface type of at least 10 points, the following:

NOTICE OF CANCELLATIO
(Enwr date of trans tio)
(Date)

YOU MAY CANCEL THIS TRANSACTION WITHOUT ANY PENALTY OR OBLIGATIOK, WITHIN THREE B!:SINESS DAYS FROM THE DATE YO!: SIGNED THIS AGREEMENT.

IF YOU CANCEL, ANY PROPERTY TRADED I , A Y PAYME TS MADE BY YO!: UNDER THE CO TRACT OR SALE, AND ANY INSTRUMENT EVIDENCING THE OBLIGATION EXECUTED BY YOU WILL BE RET!:RNED WITHIN 10 BUSINESS DAYS AFTER THE CA CELLATION, AND ANY SECURITY INTEREST ARISING OUT OF THE TRA SACTION WILL BE CANCELED. IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR RESIDE CE ANY GOODS DELIVERED TO YO!: UNDER THIS CONTRACT OR SALES; HOWEVER, YOU MUST TAKE REASONABLE CARE OF THE GOODS IN YOUR POSSESSION BEFORE CANCELLATION AND FOR A REASONABLE TIME THEREAFTER; OR YOU MAY IF YO!: WISH , COMPLY WITH THE I STRUC- 1462 FEDERAL TRADE CO MISSION DECISIONS

87 F.

TIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS A T THE SELLER' S EXPENSE AND RISK.

IF YOU DO MAKE THE GOODS AVAILABLETO THE SELLER AND THE SELLER DOES NOT PICK UP THE GOODS WITHIN 20 DAYS OF THE DATE OF YOUR NOTICE OF CANCBLLATION, YO!; MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION. IF YOU FAIL TO AKE THE GOODS AVAILABLE TO THE SBLLER, OR IF YOU AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU REMAIN LIABLE FOR ALL OBLIGATIONS UNDER THB CONTRACT.

TO CANCEL THIS TRANSACTION , MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE OR SEND A TELEGRAM TO

(N A E OF SELLER)

(ADDRESS OF SELLER'S PLACE OF BUSINESS)

NOT LATER THAN MIDNIGHT OF

(DATE)

I HEREBY CANCEL THIS TRANSACTION.

(DATE)

(BUYER' S SIGNATURE) ADVISORY OPINWJ-S 1463

Trade Regulation Rule Concerning Mail Order Merchandise recognizes that delivery time is not entirely within the control of sellers and therefore mandates performance in terms of shipping time. (File No. 763 7006, release June 15, 1976)

Opinion Letter

:vay 24, 1976

Dear :vessrs. Daly and Bauer:

This is in response to your recent letter expressing concern that delivery delays beyond the control of your organization s members may have unfortunate consequences in light of the Commission s recently promulgated trade regulation rule concerning mail order mcrchandise. The trade regulation rule recognizes that delivery time is not entirely within the control of sellers and therefore mandates performance in terms of shipping time. Therefore, postponement of enforcement of the rule is not warranted since a seller will be in compliance with the rule if merchandise is shipped as required. The fact that a parcel encounters unanticipated delays in delivery will not constitutc a violation of the rule if a seller indeed ships as required. The Commission is aware that complaint letters generally report a nondelivery or late delivery. The individual consumer is not usually in a position to know when a package 1S shipped. It should be noted however, that a large portion of the complaint letters received report not only a failure to deliver or late delivery, but an inability to obtain an appropriate response from the seller involved. In conclusion , the Commission recognizes that delays beyond the control of the shipper may result in complaints alleging apparent noncompliance with the tradc regulation rule. Preenforccment investigation , however, would reveal whether these complaints reflcct a violation of the rule or merely malfunctions of the delivery system. By direction of the Commission.

Letter of Request

April 9 , 1976

Dear Chairman Collier:

As you are no doubt aware, rather disturbing problems have come to the Nation s attention in recent weeks concerning problems with the destruction of mail order parcels by machinery in some of the U.SP.S various new Bulk Mail Centers around the country. Even now it is 1464 FEDERAL TRADE COMMISSIO:- DECISIONS

87 F.

impossible to determine how widespread the problem is, but Congress is examining the matter. Enclosed is the 12 page Report of the Subcommittee on Postal Facilities, Y!ail and Labor Management of the Committee on Post Office and Civil Service of the House of Representatives indicating what their initial investigation has shown.

As the trade association representing some 1600 mail order companies across the country we are always concerned when any number of parcels-no matter how small a percentage they may representnot reach the consumer. This worry takes on new proportions in light of your recently promulgated Trade Regulation Rule on the delayed delivery of mail order merchandise. We urge the Commission to consider, for the present, suspending the enforcement of the rule until the United States Postal Service corrects this problem which we are sure they will do in a reasonable amount of time. If a suspension is not possible, we would then urge the Commission to consider that an unknown proportion of any complaints they may now be receiving on dclayed delivery could be attributed to parcels being damaged in the bulk mail center and thus not being forwarded to the consumer. We would assume the Commission would seek to determine how significant a factor this was before proceeding to move against any company on the basis of delayed delivery complaints. Please inform us of your intentions in this regard.

Very truly yours
Isl John Jay Daly
Senior Vice President
Isl Gary L. Bauer