Cancellation Rights of Consumers

Certain consumer laws require sellers to provide cancellation rights to consumers who enter into contracts for specific goods or services. Such “cooling-off” periods apply to the following types of contracts:

• Door-to-door sales: 3 days. Ohio’s Home Solicitation Sales Act (starting at Ohio Revised Code (ORC) Section 1345.21) gives consumers three days to cancel sales made in their homes or outside the seller’s regular place of business.
• Credit and debt counseling services: 3 days. Ohio’s Credit Services Organization Act (starting at ORC 4712.01) gives consumers three days to cancel credit and debt counseling services.
• Prepaid entertainment contracts: 3 days. Ohio’s Prepaid Entertainment Contracts Act (starting at ORC 1345.41) covers the sale of services for dance lessons, dating agencies, martial arts schools, and health spas, and gives consumers three days to cancel.
• Home equity loans or mortgage refinancing: 3 days. The federal Truth in Lending Act gives consumers three days to cancel a home equity loan or a mortgage refinancing.
• Business opportunity plans: 5 days. Ohio’s Business Opportunity Purchasers Protection Act (starting at ORC 1334.01) gives consumers five days to cancel a business opportunity agreement.
• Hearing aids: 30 days. Ohio’s Hearing Aid Returns Act (ORC 1345.30) gives consumers the right to return a hearing aid for any reason within 30 days after its original delivery.
• Telemarketing sales: 7 days or until buyer signs a written agreement: Ohio’s Telephone Solicitation Sales Act (starting at ORC 4719.01) provides two options for cancellation rights: seven days following the date goods are received or services are agreed to, or seven days after the buyer signs a written agreement.

Note: Except as provided under statutes described above, consumers do not have a general three-day right to cancel a contract or purchase. For example, consumers do not have the right to cancel the purchase of a motor vehicle.

How are cancellation periods measured?

Ohio law generally measures cancellation periods in business days, though sellers should check individual statutes to determine what rules apply. Business days are Mondays through Saturdays. Sundays and federal holidays are not considered business days. Federal holidays are New Year’s Day, Martin Luther King, Jr. Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

What is the seller’s responsibility?

When a seller enters into a contract and cancellation rights are applicable, the seller generally must provide consumers a cancellation form at the time of the sale. Sellers should check the applicable law to determine what information the cancellation notice must contain. Generally, cancellation periods do not take effect until the consumer receives written notification of the right to cancel.

For example, if a health club sells a membership but fails to provide the consumer with written notice of the right to cancel, then the consumer’s right to cancel extends until the club provides written notice. The cancellation notice or form must comply with all requirements.

What is the consumer’s responsibility?

In general, to take advantage of a three-day cooling-off period, a consumer must cancel in writing by midnight of the third business day after the transaction. For example, if a martial arts school signs a contract with a consumer on Saturday, then the consumer has until midnight on Wednesday to cancel the contract, because Sunday is not a business day. If no contract is used, or if the contract does not comply with the law, the consumer’s right to cancel extends until the supplier complies with the contract requirements.

To cancel the contract, the consumer may sign and date the form and mail it to the address provided for cancellation. If the seller does not provide a cancellation form for the consumer to use, consumers may write a letter to notify the seller of the cancellation. The cancellation is effective upon the postmarked date of the letter. Essentially, this means that a cancellation is valid as long as the consumer’s letter is postmarked by the final date of the cancellation period, even if the seller does not receive or process the letter until after that date.

See R.C. 1345.23. 

When to offer cancellation rights?

• Door-to-door sales: 3 days
• Credit and debt counseling services: 3 days
• Prepaid entertainment contracts (such as dance lessons): 3 days
• Home equity loans or mortgage refinancing: 3 days
• Business opportunity plans: 5 days
• Hearing aids: 30 days
• Telemarketing sales: 7 days following the date goods are received or services are agreed to, or 7 days after the buyer signs a written agreement

Consumers do not have a general three-day right to cancel a contract for all consumer transactions.