Wednesday, June 9, 2010

Return Policies, Cancellations, and Rescissions

Consumers often turn to the Better Business Bureau for answers.  We receive hundreds of calls daily about companies, advertising, scams and laws. Our website receives tens of thousands of hits every month by people with questions about business.

One of the more common requests we hear is to explain people's rights when they don't know or understand them.  Confusion and misinformation has always circled right of rescission laws, but we have recently received a spree of calls from people in need of their clarification. When someone rescinds and agreement, it means that the agreement blinks out of existence.  It allows the buyer and the seller to go their separate ways without penalty or obligation.

Consumers often believe a right to rescission extends to all purchases and agreements.  They are often under the impression that a company must take items back within a certain time period. It does not matter if the product is untouched or unopened, a business is not obligated to accept its return just because a customer no longer wants it. A change of mind does not entitle consumers to the right of rescission.  It is referred to as buyer's remorse. When no return policy is posted or published, it's best to ask a business representative what the policy is.  Otherwise, assume there is no return policy.

On the other hand, if a purchased product is broken or inoperable, the company should take it back and exchange it for one that works or refund the money spent on the item. If someone buys a product that does not operate how it is supposed to, the seller can get in trouble for misleading 'bait and switch' advertising, unfair selling practices and even fraud if they had prior knowledge of the problem.

In the mid-twentieth century (1950s and 60s), door-to-door salesmen were everywhere, selling vacuums and makeup, radios and TVs, anything and everything.  Often enough, they charmed or pressured homeowners into buying unneeded and unwanted products.  Because of this, a federal law was passed in the 70s that allowed buyers to change their minds when purchasing products or services within their own homes.  Buyers have three days to change their minds.  The buyer can cancel for any reason whatsoever.  The agreement is rescinded. By law, the seller is required to inform the buyer of their three-day right to cancel. It must be written into all contracts. The same rule applies when products are sold at convention halls, hotel rooms, or other places away from the company's permanent address. It doesn't matter if the buyer solicited the business or the other way around.

We mostly receive calls about the rights of rescission for two types of business: Home Improvement Contractors and Car Dealerships.  They are governed by different laws.

Home improvement contractors usually solicit business at the time of an estimate on the customer's property.  Because of this, they must follow the same rules as door-to-door salesmen  If the customer signs a contract with the home improvement contractor, he must inform the homeowner of the three-day right to cancel and it must be written into the contract.

Used cars do not have any warranty or return policy unless otherwise stated by the car dealer. Good used car dealerships will often have limited warranties on their vehicles, but that does not mean they are required to.  Some consumers are also under the impression that there is a grace period to return a vehicle--whether they believe it is 3, 14, or 30 days. There is no grace period or three-day cooling off period or a right of rescission when buying a car.  Once a person signs a contract, he or she owns the car.

New cars have a return law made especially for them.  The "Lemon Law".  A new car, less than three years old, can be returned if it has a reoccurring problem.  It must be the same problem over and over.  The car could be deemed a "Lemon" and returned.

Consumers should choose carefully before purchasing anything. They could be stuck with it.  Take time to research a product or vehicle. It could save a buyer headaches and money.


  1. Please take a look at our Return Policy, "All Tiffany Surfaces Are Guaranteed For As Long As You Own Them." We've used this for years and we do stand behind all of our Products just as it is stated. Recently we had a person (not a consumer) register a complaint stating he would file it against us with you (BBB of Kansas City, about our Guarantee. Should we change our long standing Policy? Have we violated a BBB practice with this statement? If so, please advise. Thank you.

  2. Thrift store :We have no Returns policy written in our warranty card and displayed at our store.Says Repair and Exchange only .But one customer wanted to return the item after 3 days .Normal courtesy to our customer we just charge 15%- 25% of cost.Now she is telling people that she is going to take us to court and bad mouth about us to our service guys.WHats our right as a business owner.

    1. Slander, but it depends what she's saying. The lady does have right to free speech...

  3. Is this still the current status of the law in Kansas relating to buyer's remorse for purchasing a used car from a Kansas car dealer?