Caveat Vendor: 45 Years Later, Many California Companies Still Refuse to Comply with California’s Home Solicitation Sales Act

In 1971, the California Legislature enacted the California Home Solicitation Sales Act, in order to protect California consumers from salespeople at their homes. This early consumer protection statute recognized that pressure arises from the mere fact that a seller can be an intimidating presence once inside the buyer’s home. While consumers can walk away from a store, they can’t walk away from their own home, and often times the only way to get rid of these salespeople is to buy whatever they are selling. This same pressure arises regardless of whether the seller is invited in or shows up unannounced.

As a result, the Home Solicitation Sales Act provides broad protections to California buyers and creates a three-day right to cancel for most consumer contracts that are entered into away from the seller’s “appropriate trade premises.” The Act gives a broad meaning to a “home solicitation sales contract” and defines the contract by where it is entered (e.g. at the consumer’s home) and not who invited whom into the consumer’s house. (The Act does provide some exceptions to its coverage and does not apply to attorneys, real estate brokers, doctors, and some other services).

The Act creates robust notice prerequisites, in addition to providing California consumers with a 3-day right to cancel their contracts. The entire agreement must be written in the same language as the language principally used in the sales presentation, the right to cancel must be set forth in the contract in bold face type, and the seller must provide a completed “Notice of Cancellation” form that the consumer can send in to cancel the contract. In addition, at the time the contract is signed, the seller must orally tell the buyer of his or her right to cancel and that the cancellation be in writing.

And, the consumer can cancel the contract, until the merchant complies with all of these requirements. This means that if the merchant fails to provide notice of the right to cancel the contract, the consumer can cancel at any point, and the merchant may not be entitled to any compensation.

Very early on, California Courts began to recognize that while the penalties may be harsh, the requirements are clear. And in 1977, Weatherall Aluminum Products Co. v. Robert Scott et al., 71 Cal.App.3d 245, 249, a California Court of Appeal held, “the message which the Legislature has attempted to convey . . . is ‘Caveat Vendor.’ Merchants, put on notice by the statute, can easily and inexpensively protect themselves, however, by including a right to cancel provision and an accompanying notice of cancellation as a matter of course in all contracts signed outside their trade premises.”

Yet, nearly 45 years later, many companies are still failing to comply with these very straightforward requirements. California residents who contracts do not set forth the three-day right to cancel may be entitled to cancel their contracts and receive a refund for any money paid.

Written By: © Nancy Barron