They Kept My Deposit When I Cancelled — Is That Legal?
Short answer: in nearly every home-signed security sale, no. If you rescinded within the federal 3-business-day window, the company has 10 business days to refund 100% of the deposit. "Non-refundable" written on the receipt does not override federal law.
This is one of the most common post-cancellation surprises in home security, and it is also one of the most clearly illegal under federal consumer protection law.
The federal rule that matters
The FTC's Cooling-Off Rule (16 CFR Part 429) applies to sales of $25 or more made at the buyer's home (or any location that is not the seller's regular place of business). It requires:
- The seller to disclose the buyer's right to cancel at the time of sale.
- The seller to provide two copies of a cancellation form.
- The buyer to be able to cancel within 3 business days for any reason.
- The seller to refund all payments within 10 business days of receiving the cancellation notice.
- The seller to return any traded-in property or refund its value within 10 business days.
"Non-refundable" deposit language in the contract does not survive a timely rescind. Period.
When the deposit really is forfeit
Three situations where "non-refundable" actually holds:
- Sale at the company's office or showroom — the federal rule does not apply to in-store sales. You are governed by state contract law and the contract terms.
- More than 3 business days passed before you sent written cancellation — federal protection has timed out (though many states give 7-30 days; check your state attorney general's site).
- The product was already custom-fabricated for you — narrow exception, rarely applies to security equipment.
What to do right now if they refused
Step 1 — Send a certified-mail demand letter
"On [date] I cancelled the agreement signed [date] at my residence within the 3-business-day window required by 16 CFR Part 429. Federal law requires refund of all deposit amounts within 10 business days. Please remit $[amount] to [address] within 10 calendar days of this notice. Failure to do so will result in a complaint to the [state] Attorney General's office and to the Federal Trade Commission."
Keep the certified mail receipt. That is your timestamp.
Step 2 — File a state AG complaint
Every state attorney general has an online consumer protection complaint form. Search "[your state] attorney general consumer complaint." Attach the contract, the cancellation notice, and the certified mail receipt. The threat of an AG complaint resolves most refunds within a week.
Step 3 — File with the FTC
reportfraud.ftc.gov — takes about five minutes. The FTC does not pursue individual cases but the data drives enforcement actions against patterns.
Step 4 — Small claims court
If the amount is under your state's small claims limit (usually $5,000-$10,000), file in small claims court. Filing fees are small ($30-$100), no lawyer needed, and 16 CFR Part 429 is a clean win for the buyer when the facts are clear.
What about state-specific extensions?
Many states give buyers MORE time than the federal 3 business days:
- California — 3 business days for door-to-door, longer for some specific contract types
- New York — 3 business days, with strict written-notice requirements on the seller
- Florida — 3 business days for home solicitation
- Most states — 3 business days; some give up to 7
Run the Contract Analyzer on your contract — it flags whether your specific contract acknowledges your state's longer rescind window.
Bottom line
"Non-refundable" on a security-contract receipt is almost always unenforceable when the sale happened in your home and you rescinded in time. Certified-mail demand letter first, AG complaint if they ignore it, small-claims court if needed. In our experience, 9 out of 10 of these resolve at the certified letter stage.
Read The Already Signed Escape Paths for the broader playbook on getting out of a contract when something has already gone wrong.