Layaway has become increasingly popular with the challenging economic times. Many find it very helpful during the holidays to be able to space out payments and avoid interest charges. However, putting an item on layaway may bring the risk of losing your money or the item itself if you don’t read the contract carefully.
BBBs around the country have received complaints in the last year from consumers whose layaway purchase did not turn out the way they anticipated.
Consumers mainly place furniture, toys and jewelry on layaway and do so at a variety of stores, including national chains, local retailers and pawn shops.
“Layaway has made a huge comeback because consumers avoid high interest fees,” said Claire Rosenzweig, President and CEO of the BBB Serving Metropolitan New York. “But, there are some risks that consumers should be aware of, such as the company going out of business. Be sure to check out the business first with BBB, at www.newyork.bbb.org, so you sign up with a reliable retailer.”
The BBB suggests that consumers consider the following if they use layaway this holiday season:
- Ask the company for a written contract for the layaway plan and read it carefully. Keep in mind that each company may have a different layaway policy. Check for:
- How long can the item be on layaway?
- It’s important to know that some items have a time limit and once that time is up, the item is returned back to the store for someone else to purchase.
- Will the item be placed in a holding area until all payments are made?
- If the item is not held for you, it may be inadvertently sold to another customer.
- Is there a specific date when each payment must be made?
- The contract may specify when payments must be made and that, if a payment is not made on time, the layaway item can be sold to another consumer.
- What is the company's refund policy? Will only a store credit be issued? Is there a restocking fee?
- Consumers report not being able to obtain a refund or a store credit if they change their mind about buying the item put on layaway. In addition, complaints state that restocking fees of 10% or more are often charged.
- When putting a product that is not in stock on layaway, is the product ordered when the layaway is opened or when the last payment is made?
- Consumers report that even after the last payment is made the product is sometimes not available, but has to be ordered, and sometimes is delayed for weeks or months.
o Delivery timeframe should be agreed to up front.
§ Consumers report that after the last payment, delivery has been delayed because the product is not available or the delivery dates for other consumers are scheduled ahead of layaway customers.
- Is there a fee to use the layaway program? If so, how much is the fee and is it refundable?