Nebraska Home Solicitation Sales Act
Is your company engaging in door-to-door sales this spring or summer? Don’t forget about the requirements of the Nebraska Home Solicitation Sales Act.
Now that Nebraska has finally defrosted from the winter, the higher temperatures and sunny weather bring hectic schedules and more work for those in the construction industry. With the warmer weather, contractors are increasing sales efforts, including potentially engaging in door-to-door sales to market their services directly and attract new customers. Thus, it is important for contractors engaged in these door-to-door sales efforts to think about the impact of Nebraska’s Home Solicitation Sales Act (the “Act”), review their sales practices, educate their sales team, update their contracts to ensure compliance with the Act, and generally be aware of their obligations upon receipt of a cancellation from a customer.
Below are some answers to a few FAQ’s regarding the Act, including some pointers on how to ensure you and/or your sales team do not run afoul of the notice requirements of the Act.
Q: What is the Nebraska Home Solicitation Sales Act?
Nebraska’s Home Solicitation Sales Act, (Neb. Rev. Stat. § 69-1601 to 69-1607), also known as the Three-Day Right to Cancel, is a set of laws that provides consumers with certain cancellation rights when companies engage in door-to-door sales. The Act also imposes certain disclosure obligations on companies engaging in door-to-door sales. The purpose of the Act is to protect consumers from high pressure sales tactics by giving the customer a “cooling off” period within which the customer can cancel contracts that fall under the Act.
Q: When does the Act apply?
At the outset, it is important to know when the Act applies and when it does not apply. The Act applies to sales made in the customer’s home or sales that occur in a location other than the seller's regular place of business. Accordingly, the Act is not strictly limited to situations where a contract is executed in the customer’s home. For example, locations not considered the “seller's normal place of business” may include a variety of off-site sales, including temporarily rented rooms, restaurants, and even social events.
Additionally, some types of sales are not covered by the Act even if they occur in a customer’s home. For example, the Act does not apply to the following sales:
- Sales under $25.00,
- Sales that are the result of prior negotiations made by the consumer at the business' permanent location,
- Purchases of items needed to meet an emergency when the consumer made the initial contact with the business,
- Sales of securities and commodities,
- Transactions defined as consumer rental purchase agreements, or
- Sales involving home repair or home maintenance when the homeowner initiated the sales call.
Q: How can a business engaging in door-to-door sales be in compliance with the Act?
It is important to ensure (i) that your sales staff are familiar with their disclosure obligations under the Act; and (ii) that the sales contracts used by you or your company are in compliance with the Act such that they contain the statutorily required notice. With respect to a sales representative’s disclosure obligations when engaging in door-to-door sales, any seller must, at the outset of communicating with the customer, “clearly and expressly disclose the seller's individual name, the name of the business firm or organization he represents, and the identity or kind of goods or services he offers to sell.”
With respect to the contractual requirements imposed by the Act to notify a customer of their right to cancel, the Act requires that all home solicitation sales contracts include a notice of the Three-Day Right to Cancel with this heading: "BUYER'S RIGHT TO CANCEL," in letters of not less than ten-point boldface type and that the notice appear “conspicuous.” Under the heading, the notice must read as follows:
You may cancel this agreement by mailing a written notice to (Insert name and mailing address of seller) before midnight of the third business day after you signed this agreement. If you wish, you may use this page as that notice by writing "I hereby cancel" and adding your name and address.
Q: What is the impact of failing to comply with the Act?
It is critical that you include the foregoing notice in your sales contracts for several reasons. First, until a seller has complied with the notice requirements, the buyer is entitled to cancel the home solicitation sale at any time by notifying the seller in any manner and by any means of their intention to cancel. Thus, for example, a customer could engage a roofing contractor to install a roof at their home, the contractor could order all materials necessary for the project and even substantially complete the project, and the customer could rightfully cancel the contract after the roof is installed.
Second, in any sale made in violation of the Act, the buyer is entitled to recover any sums paid to the seller pursuant to the transaction along with the actual damages, including any incidental and consequential damages, sustained by the buyer as a result of the violation, as well as the costs of the suit and reasonable attorney fees. Therefore, if a dispute with a customer arises and the customer can prove damages sustained by reason of the failure of the contractor to provide notice of the Buyer’s Right to Cancel, the contractor could be on the hook for damages and even have to pay the customer’s attorney fees.
Q: How does a buyer cancel under the Act?
Under the Act, a buyer may cancel a home solicitation sale until midnight of the third business day after the seller has provided the required notice. The notice of cancellation is required to be by mail, addressed to the seller, and is deemed given at the time of mailing, not when the business receives it. Notice of cancellation by the buyer does not need to take a particular form and is sufficient if it indicates the intention of the buyer not to be bound by the home solicitation sale.
Q: How should I respond to a customer’s cancellation under the Act?
Upon receipt of a customer’s cancellation, it is important to honor a customer’s decision to cancel under the Act to avoid exposure to potential litigation or complaints to consumer protection agencies or the Nebraska Attorney General. Upon receipt of a buyer’s cancellation, the business has ten (10) days after the sale has been canceled to refund the consumer's money. Upon refunding the customer’s money, the customer must tender any property or goods of the seller’s in their possession back to the seller. For example, if a roofing contractor dropped off shingles at a customer’s residence, the customer must return the shingles upon receipt of their refund. If the seller does not take possession of the returned property/goods within twenty (20) days, ownership of the property/goods defaults to the customer.
As you prepare for the busy construction season, compliance with Nebraska’s Home Solicitation Sales Act will ensure that your sales team can make the most of these productive months by avoiding the distraction of a potential dispute with a customer regarding their rights to cancel, or worse, costly litigation. This article is meant to provide a general understanding of Nebraska’s Home Solicitation Sales Act. There are many nuances to complying with the Act. For that reason, please do not hesitate to contact one of the members of Koley Jessen’s Construction Industry Practice area if you have any additional questions.