Dealers should proceed with caution in blindly relying on the common assumption that there is no cooling-off period for automobile sales. Under federal law, vehicle sales are not expressly exempted from what is commonly referred to as the Door-to-Door Sales Rule. The law requires that sellers provide buyers with a limited right to cancel where the transaction amounts to a door-to-door sale. A door-to-door sale is defined as “[a] sale, lease, or rental of consumer goods or services with a purchase price of $25 or more, whether under single or multiple contracts, in which the seller or his representative personally solicits 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 seller (e.g., sales at the buyer’s residence or at facilities rented on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants, or sales at the buyer’s workplace or in dormitory lounges)” (emphasis added). 16 C.F.R. 429.0 (2010).
As discussed in the California New Car Dealers Association’s (CNCDA) May 2010 Bulletin, dealers must be wary when engaging in off-site sales. While the Rule exempts “sellers of automobiles, vans, trucks or other motor vehicles sold at auctions, tent sales or other temporary places of business, provided that the seller is a seller of vehicles with a permanent place of business,” it does not categorically exempt all off-site sales. 16 C.F.R. 429.3 (2010). In an effort to determine which common dealer activities may fall within the Door-to-Door Sales Rule, the CNCDA recently obtained clarification from the Federal Trade Commission (“FTC”). The FTC advised the CNCDA that the Door-to-Door Sales Rule is inapplicable where off-site deliveries and brokered transactions are concerned but may be applicable in circumstances involving ongoing negotiations or co-buyer signatures. More specifically, the Rule may apply where the dealer has a general agreement to sell the vehicle but completes the negotiations and contract off-site and/or when the dealer must have a second co-buyer sign the contract off-site.
Erica A. Stuckey