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RAB Performance Recoveries, L.L.C. v. George

419 N.J. Super. 81, 16 A.3d 406 (App. Div. 2011)

CONTRACTS; RESCISSION; NOTICE — A door-to-door seller who fails to provide the notices concerning cancellation procedures required by federal law and the Door-to-Door Retail Installment Sales Act of 1968 cannot insist on the buyer’s later strict compliance with those procedures.

A door-to-door salesperson persuaded a consumer to purchase textbooks for an online nursing course. When the consumer explained that she could not start the course for months, the salesperson assured her that the books would not be shipped until she requested them. He also told her that she could cancel the contract within three days of signing. Based on those representations, the consumer signed an installment contract to buy the books. The contract included written notice that she had the right to cancel within three days, but did not explain how to do so. The salesmen did not give the consumer a receipt or the written cancellation instructions required both by federal regulations and the Door-to-Door Retail Installment Sales Act of 1968 (DDRISA).

The books arrived two days after the contract was signed. The consumer testified that she called the salesperson, reminded him that she did not need the books yet, and told him that she wanted to cancel the contract. However, the salesperson insisted that she could not cancel the contract after the books had been delivered. The consumer received the same response from the salesperson’s employer, the seller of the books. The bookseller assigned the contract to a collection agency and it sued the consumer to collect.

At trial, the lower court, based on the credibility of the consumer, found that the bookseller had failed to provide the consumer with written notice as to how to cancel the contract. Further, the packet of contract materials the bookseller entered into evidence were devoid of any cancellation instructions. The lower court found that the consumer had taken reasonable steps to cancel by telephoning both the salesperson and bookseller and advising them of her desire to cancel. Because the bookseller incorrectly told the consumer that she had no right to cancel, the court found that her failure to cancel in writing was excusable and the verbal cancellation was effective. The lower court directed the consumer to return the books, which she did, and dismissed the collection complaint.

On appeal, the Court agreed with the lower court that a door-to-door seller who fails to provide the statutorily-required notices concerning cancellation procedures cannot insist on the buyer’s strict compliance with those procedures. Here, the seller did not provide the required written instructions or the cancellation form. Additionally, in violation of federal law, the seller misinformed the buyer by telling her that she had no right to cancel and that she could not return the books. The underlying purpose of the DDRISA is to permit a consumer to reconsider his or her purchase, and consumer protection legislation is construed liberally to as to effectuate the legislature’s intent. Thus, the seller was not entitled to the written cancellation notice the DDRISA otherwise required and the judgment was affirmed.


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