Home Solicitation and Telemarketing

1. Which of the following is/are reason(s) why door-to-door sales present unique consumer problems?
a. pressure tactics that are not possible in a retail store
b. the company cannot police its sales force
c. there is no opportunity to comparison shop
d. all of the above

<>    -----Other problems?
          -----often misrepresentations ("free"; "selected"; $.50/week)
          -----prices often higher
          -----no place to complain/return products
          -----read Kirby article
         

<>2. Cooling-off laws generally require the merchant to provide
a. written notice of the consumer's right to cancel
b. oral notice of the consumer's right to cancel  (cuz we know consumers don't read their contracts)
c. both of the above
d. neither of the above; consumers are expected to know the law



3. The federal Truth-in-Lending Act (TILA) provides a three-day cooling-off period
a. in all door-to-door sales
b. only where consumers use their homes for collateral in door-to-door sales
c. in all sales where consumers use their homes for collateral   (e.g., home improvement cases)
d. none of the above; TILA does not provide a cooling-off period

    -----Why? Two reasons:
          -----to make sure consumers have time to think before they sign away their homes
          -----in recognition that many home improvement scams involve obtaining second mortgages




4. The following questions relate to the Cole v. Lovett case

a. What was the product?
    -----aluminum siding


b. How was the sale solicited--i.e., was it a true "door-to-door" (home solicitation) sale?
    -----this was disputed
    -----Capitol claimed Coles contacted them; Coles claimed otherwise
    -----neighbor testified it was a "referral sale"; what's that?


c. Note the manner in which the various documents were signed.  Was there anything unusual (i.e., sleazy, deceptive, etc.)  about what Capitol Roofing did?
    -----read * p. 1


d. The Coles signed a “deed of trust.”  What is that and what are the consequences of signing such a document?
    -----second mortgage
    -----if you default, creditor can foreclose


e. Did the Coles know they were signing the deed?

f. After the contractors left, what did the Coles try to do?  Were they successful?
    -----tried to cancel the following day
    -----were told it was too late


g. What did Capitol Roofing do with the contract and deed after the Coles had signed the documents?
     -----sold it to United Companies Mortgage (UCM) (explain)


 h. Under what law or laws did the Coles sue?
    -----federal Truth-in-Lending Act (TILA)
    -----Mississippi Home Solicitation Sales Act (MHSSA)


i. On what basis were they able to sue under the federal Truth-in-Lending Act?
    -----failure to disclose security interest (deed of trust)
    -----failure to give oral and written notice of right to cancel


j. How did the court rule?  Under both laws?
    -----for the Coles under both laws
    -----Under TILA, two violations
           -----failure to disclose security interest
           -----failure to give notice
    -----under MHSSA, failure to give notice
           -----thus lawyer's letter served as notice of cancellation
           -----Capitol should have refunded the money at that point


k. Ultimately, what did the Coles get? Why?
    -----free siding
    -----Capitol didn't meet its obligation to return their money within 10 days, so gets nothing (* p. 5-6)



5. What do you think about the fairness of the result?  Does this case indicate a shift from “caveat emptor” to “caveat vendor"?
    -----yes
    -----in fact, court said exactly that (see * p. 6)



You will need to review sections 2451a and 2454 of Title 9 (linked from section 6 in your reading) to answer the next four questions.


6. True or False. Under Vermont law, the rules that govern door-to-door sales (e.g., requiring oral and written notice of a three-day notice of cancellation)  apply to telephone sales.
    -----True
    -----2451a. (d)


7. Harry Homeowner calls a local appliance store to come to his home and repair his refrigerator. Rod, the repairman, concludes it needs a new compressor. Rod says he'll order the part and Harry signs a contract to pay for it.  Harry asks Rod to take a look at his microwave, which hasn't been working properly. Rod concludes the microwave needs to be replaced. He has the same model in his car, and Harry agrees to buy it on the spot, the bill to be paid in 30 days.  After Rod leaves, Harry re-thinks his decisions and wants to cancel both contracts. Harry is entitled under Vermont law to cancel
a. the repair contract
b. the microwave contract
c. both contracts
d. neither contract because this is not a home solicitation sale

    -----b
    -----2451a. (d) (2)
    -----note the other exceptions
    -----note (d) (7) is the "LL Bean exception"
    -----note (e) defines "business day"


8. Same facts as #6. Assume that Harry signed the contracts at noon on a Friday and he has the right to cancel. Until what day and time can he cancel?
a. noon on Tuesday
b. noon on Wednesday
c. midnight on Tuesday
d. midnight on Wednesday

    -----d
    -----2454 (a) (1)
    -----go through rest of (a) and (b)



9. Same facts as #6. Assume that Rod gets Harry's cancellation notice on the first of the month. Rod leaves Harry a message on his answering machine asking Harry to drop the microwave off at the store. By the end of the month Harry has not done so, so Rod stops by Harry's home to pick it up. Does Harry have to return the microwave (or pay the bill), or can he keep the microwave without paying for it?

    -----keep it
    -----2454 (d) (3)
    -----note 2454 (d) (7)
    -----2454 (h)



10. The following questions relate to the Vermont Supreme Court decision in Bruntaeger v. Zeller
a. Where did the sale take place?
    -----Sheraton Hotel in Burlington

<>
b. What did Mrs. Bruntaeger purchase and what was the problem?
    -----fur coat; it was defective; Zeller said if he sent it back, she'd have to keep it regardless of condition


c. What did the defendant argue in terms of what type of businesses were meant to be covered by the home solicitation sales law?
    -----"fly by night" businesses


d. Was his business such a business?
    -----no; he had a regular place of business in St. Johnsbury


e. Why did the court rule that it was a "home solicitation sale" covered by the law?
    -----sold from seller's "transient  quarters"
    -----2451a. (d)


f. Who won?
    -----Mrs. Bruntaeger


g. What did she recover?
    -----$2700 (what she paid)
            -----unclear whether it's damages or consideration
    -----attorney's fees


h. What did the court say the plaintiff would have to prove in order to collect exemplary damages?
    -----malice, ill will, wanton conduct


i. Had Mrs. Bruntaeger proven that in this case?
    -----no

You'll need to look at the fact sheet on the FTC Telemarketing Sales Rule to answer the next two questions.

11. True or False. It is lawful for telemarketers to call you between 7 a.m. and 11 p.m.
    -----false
    -----8 a.m. and 9 p.m. (go to link to FTC fact sheet in lecture notes)


12. True or False. It is lawful for telemarketers to charge a processing fee before awarding you a prize won in a prize promotion.
    -----False
    -----again, go to fact sheet in lecture notes
    -----an effort to deal with one of the enduring scams-- "prize promotions"