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Consumer Law

The Costs of Failing to Comply with the CSPA’s Cancellation Rules

By January 24, 2019August 2nd, 2021No Comments

Contrary to popular belief, consumers in Ohio do not have a three-day cancellation right for all consumer transactions. However, under the Home Solicitation Sales Act (HSSA), codified at R.C. 1345.21 et seq., consumers are generally protected by a three-day cooling-off period from perceived “high pressure” door-to-door sales. A home solicitation sale is a sale of $25 or more in which the supplier makes an in-person solicitation that results in an agreement being signed outside the supplier’s normal place of business- often, the consumer’s residence.

To comply with the cancellation requirements of the HSSA, a supplier must:

Stamp laying down with the word "cancelled" stamped in red
  • Give the consumer a copy of the signed written agreement, including the date, the supplier’s name, the supplier’s address, and the language used in the verbal sales presentation;
  • Provide a notice of cancellation form notifying the consumer of their right to cancel (R.C. 1345.23);
  • Accept the consumer’s right to cancel the sale, for any reason, within three business days of the sale; and
  • Not begin any service until the three-day cooling-off period has ended.

If a consumer wishes to take advantage of a three-day cooling-off period, they must cancel in writing by midnight of the third business day after the contract is signed.  Cancellation periods do not take effect until the consumer receives written notice of their right to cancel. If no contract exists, or if the contract does not comply with the law, the consumer is free to cancel the sale up until the time the supplier complies with the notice requirement. Essentially, this means that in certain situations where the supplier fails to provide cancellation terms in the agreement, the consumer would be entitled to cancellation and a refund even after the supplier performed the work.

Not all forms of cancellation are acceptable, however. To cancel the contract, the consumer must:

  • Sign and date the provision in the contract and mail it to the supplier’s notice address.
  • If the supplier does not provide a cancellation form, write a letter notifying the supplier of the cancellation. The cancellation is effective upon the postmarked date of the letter, meaning 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 supplier does not receive or process the letter until after that date.
  • Cancel a contract by personally delivering the written cancellation to the appropriate address of the supplier.

Under Ohio law, it is not acceptable to cancel a contract via e-mail, fax or telephone.

If a consumer appropriately cancels a home solicitation sale, the supplier must provide a refund to the consumer within 10 days of receiving the consumer’s cancellation notice. If any goods were left at the consumer’s home, the consumer must make those goods available to the supplier, who must arrange to pick them up.

              Though there are limited exceptions to the cooling off requirement, the three-day cancellation provision in the HSSA has the potential to be extremely costly to suppliers who fail to comply with them. In extreme situations, the supplier can complete the work and lose out on the cost of labor and materials by failing to meet the required cancellation requirements. Accordingly, it is essential that any supplier engaging in home solicitation sales ensures that their contract includes the requisite language necessary to prevent the consumer from canceling unexpectedly at a later date- usually at the supplier’s detriment.

This is the eighth installment of our series on Ohio’s consumer laws, designed to raise awareness of a part of business owner’s potential pitfalls of these laws and how they can be avoided. You do not want to find yourself on the wrong side of a CSPA lawsuit. If you haven’t already, catch up on this series on the CSPA:

Cindy Menta is an Associate Attorney attorney at Gertsburg Licata. Her practice is focused primarily on real estate transactions and commercial litigation. She can be reached at [email protected]

Gertsburg Licata is a full-service, strategic growth advisory firm focusing on business transactions and litigation, M&A and executive talent solutions for start-up and middle-market enterprises. It is also the home of CoverMySix®, a unique, anti-litigation audit developed specifically for growing and middle-market companies.

This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.

 

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