In addition to the consumer protections outlined above for typical consumer products, there are also protections for other kinds of purchases. The Truth in Lending Act is a federal law that permits individuals to cancel a home improvement loan, a second mortgage, or other loan when the home has been pledged as security for the loan. This law does not apply to first mortgages. The law allows borrowers to cancel one of these contracts until midnight of the third business day after signing the contract. In some cases, the three-day period may be extended for up to three years. The Act requires the lender to inform borrowers about their right to cancel such contracts. Additionally, the borrower must provide a cancellation form when the borrower signs the loan documents.
Many states have enacted laws that allow consumers to cancel written contracts covering the purchase of certain goods or services within a few days of signing. Some of these include contracts for the following:
- dance or martial arts lessons
- memberships in health clubs
- dating services
- weight loss programs
- time share properties
- hearing aids
State consumer protection agencies have a complete listing of the kinds of contracts covered in their state.