Consumer Smarts: Myth of the cooling-off period

Contrary to popular belief, Washington law doesn't allow a blanket three-day "cooling-off" period once you've signed a contract to buy a car or other major purchase. I often hear from readers who wrongly believe they have three days to change their minds and they're disappointed to learn this isn't true.

Q: So when can you get out of a contract?

A: State and federal laws give you the right to cancel contracts in very limited circumstances, including door-to-door sales, timeshares, business opportunities, credit-repair firms and health clubs.

But there is no "cooling-off" period for automobile purchases or leases.

"That's the biggest myth in the car business," said Doug Walsh, chief of the consumer protection division of the Attorney General's Office. "They think they can get out of a major purchase."

Walsh advises not signing a contract until you read it, understand it and agree to it.

Once you sign an agreement, you are legally bound. Have a clear understanding of what you're buying and be sure you read any contract carefully before signing it, he said.

According to the Attorney General's Office, consumers have the right to cancel a contract in these specific cases:

Membership contract with a health club: three business days from signing to get a refund.

Timeshare purchase: seven business days after signing the contract or after receiving the state-required disclosures about the timeshare, whichever comes later.

Door-to-door sales and sales at home shows, expos and seminars: three business days on sales of more than $25. Examples include sales at a seminar in a hotel banquet room or a sales party at someone's house.

Retail purchases involving payments made in installments: three business days. Common examples are vacuum cleaners and magazine subscriptions. This state law applies if the contract was made away from the seller's usual place of business or by commercial telephone solicitation.

Telemarketing sales: within three business days of getting written confirmation (a sale isn't final until you get it in writing). The written confirmation should explain how to cancel and provide an address to send your cancellation notice. You also can cancel if you don't get the item within 42 calendar days.

Contracts with credit-repair companies: five business days from signing it.

Home-equity loans or lines of credit: The federal Truth in Lending Act gives borrowers three business days after signing a contract to walk away from a loan without paying a penalty. This cancellation right applies when you use your home to guarantee repayment for a personal loan. It doesn't apply on loans to buy or build your principal home, if you refinance your loan with the same lender or if you're borrowing from a state agency. You have until midnight of the third business day to cancel the credit transaction, according to the Federal Trade Commission. If you decide to back out, you must notify your creditor in writing.

Hearing aids: within 30 calendar days of delivery for reasonable cause, and not merely because you've changed your mind.

Business opportunities that let you start a business through the purchase or leasing of equipment: seven business days; does not apply to franchises.

Memberships to camping clubs: three days to cancel, but you get six days if you didn't get a chance to inspect the camping club facilities first.

Private vocational schools that don't grant degrees: five days to cancel and get your money back in full if you haven't started your training.

To cancel a contract, the Attorney General's Office recommends that you write a letter to the company explaining that you want to cancel the purchase and keep a copy for your records. Mail the letter by certified mail and request a return receipt.