Remember back when you would have to go into stores for just about everything. You just couldn’t buy most things online. Remember when you would have to strategically pick the least busy time to go to the grocery store to prevent having to wait in those long lines. Back then, if I told you that someday you could order groceries online and have them delivered in a matter of hours to your door, I am sure that you would have given me a blank stare, thinking: “Is this person alright?” Oh, have the times changed! Now, most things can be ordered from websites or apps. And, yes, people can even buy vehicles online and have them delivered. This last point is of great importance for dealers (and for this article).
During the pandemic, online sales and remote deliveries skyrocketed, and have become commonplace. Naturally, we have received many calls on Hotline on the subject. One line of inquiry, however, has been gaining traction as of late. Specifically, dealers have been calling the Hotline in a panic about there being a “three-day cancellation right” whenever they perform a remote delivery for a customer. The goal of this article is to set the record straight about this “three-day cancellation right” and to show that there is probably no need to panic so long as you follow the recommended steps.
Where Does the Idea of a Three-Day Cancellation Right Come From?
Both California and federal law provide consumers with a three-day right of cancellation for certain sales that are conducted at the consumer’s residence or other temporary location (California law was recently amended to include a five-day right of cancellation for senior citizens). Generally, these laws require that when goods valued at $25 or more are sold “door-to-door,” the consumer must be provided with a written notice explaining that they have three days (or five) to cancel the sale.
California Civil Code section 1689.6 (a)(1) states in pertinent part that “the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day, or midnight of the fifth business day if the buyer is a senior citizen…” Civil Code section 1689.5 defines “home solicitation contract or offer” as “any contract…for sale, lease, or rental of goods or services or both, made at other than appropriate trade premises in an amount of twenty-five dollars ($25) or more, including any interest or services charges.”
Federal law, also known as the FTC’s Cooling Off Rule, gives consumers three days to cancel certain sales made at their home, workplace, or other temporary locations (think convention center, hotel room, etc.) [See 16 CFR § 429.0].
So, Is There a Three-Day Cancellation Right?
If you only read the previous section, you are probably thinking: “There must be more, right?” After all, we do not give three-day (or five-day) cancellation rights in California. Well, if you read further into the Civil Code, you will find the following limitation in the definition of goods covered under the law: “ ‘Goods’…does not include any vehicle required to be registered under the Vehicle Code…” [Civil Code § 1689.5(c)]. Accordingly, California law unequivocally exempts vehicle sales and leases from the three-day (or five-day) cancellation right.
Regarding federal law, there is no unequivocal exemption for vehicle sales or leases. However, the FTC Cooling Off Rule does not cover sales made entirely online, by mail, or telephone, and does not cover sales made after completing negotiations at the seller’s permanent place of business, where the seller regularly sells the goods bought.
So, What Does This All Mean?
It all means that there probably is not any three-day (or five-day) cancellation right for performing a remote delivery for the customer so long as the dealer abides by the following:
- The sale terms must be arranged by mail, email, phone, or online prior to delivery. The sale terms could also be fully negotiated at the dealership prior to delivery.
- Documents can be signed by the customer at the point of remote delivery (i.e., the customer’s residence) so long as all deal terms have been agreed to in advance of the delivery. The dealership should already have signed the documents where a signature is required.
- Dealership personnel performing the delivery can explain the features of the vehicle, but must not engage in “selling” or “solicitation” while at the customer’s residence, workplace, etc. This means that the dealership employee cannot attempt to “up-sell” the customer into adding more optional products during the delivery. This also means that the customer cannot attempt to further negotiate the terms of the deal, such as trying to get a lower price for the vehicle or a higher trade-in allowance.
- If the customer is insistent on continuing negotiations, the dealership employee should not engage and should drive the vehicle back to the dealership. Only once back at the dealership with the vehicle can negotiations continue.
Questions?
If you have any questions regarding this, or any other situation that may arise in your sales or service departments, hotline clients are invited to contact us at (800) 785-2880 (then press “4” for hotline) or [email protected].