The New Jersey Division of Consumer Affairs is responsible for administering the Consumer Fraud Act. The New Jersey Legislature passed the act to regulate deceptive sales practices and to supplement the federal Cooling-Off Rule. The New Jersey Consumer Fraud Act doesn't require all vendors and businesses to give consumers a three-day right of rescission to cancel their transactions. Instead, the three-day right applies to health membership clubs, which must provide consumers with a written disclosure notice with each gym membership contract.
Congress enacted the federal Cooling-Off Rule in 1972 to protect consumers against deceptive sales practices by door-to-door salespersons. Over the next few decades, Congress extended the federal law to protect other types of consumers — not just consumers approached at home by door-to-door salespersons. The federal Cooling-Off Rule doesn't apply to certain types of transactions, and to further protect consumers, New Jersey adopted further protections. Under federal law, consumers may waive their three-day rescission rights if done in writing.
The federal Cooling-Off Rule gives consumers a three-day right of rescission to cancel contracts for services or goods that equal or exceed $25. Although the federal consumer protection law applies to most contracts of at least $25, it doesn't apply to sales made over the phone, sales for nonpersonal or nonhousehold items, insurance sales, contracts for the sale of securities, real estate sales, automobile sales and vehicle leasing transactions if the seller has more than one physical business location. Under the federal law, consumers have three days to cancel their qualified purchases, and sellers must inform them of their right to cancel their sales and give them full refunds if done within three business days. Sellers may enter into written agreements with consumers waiving their rights to rescission.
New Jersey Consumer Fraud Act
The New Jersey Consumer Fraud Act requires health clubs to provide consumers with a three-day written disclosure notice allowing them to rescind their contracts within three business days. The disclosure notice must be conspicuously placed on the first page of a health membership contract. Consumers have three days to cancel their membership contracts, and if they cancel them by midnight of the third business day, health clubs must refund their fees within 30 days of cancellation. The statute specifically states that health clubs can't enter into waivers with consumers revoking their rights to rescission, and that all waivers are void.
New Jersey Contractors' Registration Act
In addition to the Consumer Fraud Act, the New Jersey Division of Consumer Affairs administers the New Jersey Contractors' Registration Act. Under this act, contractors providing home improvement services are required to refund a homeowner's fees if she cancels her home improvement services contract within three business days. The act applies to contracts for services exceeding $500. The act requires contractors to prominently place their disclosure notices informing homeowners of their rights to cancel within their sales contracts. The statute is silent on whether a homeowner may waive his right to the three-day rescission period. After a consumer exercises his right and cancels within three days, contractors have 30 days to fully refund their money, including financing fees and interest.
- USA.gov: Cancel a Purchase Under the 3-Day Cooling-Off Rule
- New Jersey Department of Consumer Affairs: Consumer Fraud Act
- New Jersey Department of Consumer Affairs: Administrative Rules of the Division of Consumer Affairs
- New Jersey Department of Consumer Affairs: Contractors Registration
- Federal Trade Commission: The Cooling-Off Rule — When and How to Cancel a Sale