Customers attempting to back out of vehicle sales have prompted dealer questions regarding the Federal Trade Commission’s “Cooling Off Rule.” The FTC rule, which allows a period of three days during which time a consumer may cancel a purchase, relates only to home solicitation sales or sales that occur at certain locations other than the seller’s regular place of business.
When visiting the dealership, it is the customer who initiates the sale and therefore the Cooling Off Rule does not apply. The signed documents that complete the sale are binding, and the customer may not return the vehicle for a refund because they changed their mind.

The Cooling Off Rule also does not apply to organized, off-premise sales (i.e. tent sales, auto shows), which are considered extensions of the dealer’s permanent place of business.

FTC Rule Does Not Apply to Internet Sales
The Cooling Off Rule does not apply to certain transactions that are initiated and fully negotiated and concluded by consumers over the Internet. Even if the dealer has a delivery driver obtain the buyer’s signature at the buyer’s residence, the rule would not be triggered.

However, if the driver performs other functions, such as continuing the Internet negotiations or selling additional products or services at the customer’s home, the rule would apply.

Vehicle Returns - A Business Decision to Enhance Customer Service
Some dealers have adopted right-of-return policies for pre-owned vehicles. Any return policy should be clearly defined (i.e., three business days, 72 hours) and uniformly applied. If a dealer agrees to take a vehicle back, because a right-of-return offer has been extended or simply to accommodate a dissatisfied customer, the following procedures apply:

Once all of the paperwork has been signed, PennDOT considers the sale to be complete and title and registration fees are nonrefundable.

Because PennDOT views transfer of ownership as occurring at the time the back of the title or MSO was signed, the MV-1 or MV-4ST completed, and a registration plate issued or transferred, the title, lien and registration fees, and a dealer title fee must be submitted.

Taxes
Taxes do not have to be paid as long as the vehicle is returned within 20 days. Once the paperwork is processed, the plate that was issued will be removed from the corresponding title record by PennDOT.

Copies of the transaction must be kept in sequence as required by PennDOT regulations Chapter 43.

If titlework was already submitted and sales tax was paid, a sales tax refund may be requested. Depending on the situation, either the customer or the dealer can apply for the refund from the Department of Revenue using Forms REV-65 and REV-39.

The dealer should advise the customer that the refund may take as long as six months. In lieu of a sales tax refund, a customer could trade the vehicle in and be given trade-in credit for another vehicle purchased from the dealer’s inventory.

Deposits
Under the Attorney General’s Automotive Trade Regulations, a customer’s deposit is nonrefundable only if:
• the specific dollar amount the dealer will retain is listed on the sales contract;
• the clause is clear and conspicuous; and
• the customer has read and initialed it.