With the holiday season fast approaching, now is a good time to think about the various shopping options available to consumers. Layaway is an old fashioned concept that is making a comeback; a lesson learned from the recent recession. Several major stores are offering layaway options this holiday season, so it is good to be aware of the laws governing layaway transactions and best practices retailers should be following.
According to The Free Dictionary, layaway is a payment plan in which a buyer reserves an article of merchandise by placing a deposit with the retailer and making payments until the balance is paid in full. Typically, the retailer will hold and store the item until the consumer completes the installment payments in full and the item is paid for, including any fees.
Layaway purchase plans can be a good option for those with bad credit, those who do not have or want to use credit cards, or those who may not have the cash readily available for a larger purchase. Layaway purchase plans are designed for people who want to buy products and services without using credit or paying the full price immediately. Even though there may be a small service fee, an advantage of layaway is that no interest is charged to the consumer.
California Law regarding layaway practices is governed by the California Civil Code, sections 1749-1749.4, which states that retailers must provide the seller with a written statement of the terms and conditions of the agreement, including:
(1) The amount of the deposit received.
(2) The length of time the goods will be held on layaway which may be expressed as a period of time or as a date when final payment for the goods is due.
(3) A specific description of the goods.
(4) The total purchase price of the goods including a separate listing of any handling or processing charges.
(5) Any other terms and conditions of the layaway agreement.
(6) That the seller will refund any layaway deposit and subsequent payments, if any, when, before the end of the stated layaway period, the goods have for any reason become no longer available in the same condition as at the time of the sale to the consumer.
There may be other limitations imposed, and most stores take advantage of this; limiting layaway to certain types of merchandise, such as toys, electronics, appliances, furniture, and jewelry.
The Federal Trade Commission (FTC) provides information on their website about online layaway and general tips for consumers. The FTC suggests consumers check the agreement for details and information on the retailer's refund policy. This will help determine what will happen if consumers decide they do not want the merchandise after they have already made some or all the payments, or under what circumstances a refund can be given, if any. Retailers' policies may differ: some give all the money back; others may charge a non-refundable service fee; still others may offer a merchant credit for the amount you paid. The FTC also provides sample language for refund policies and what information should be included in the sales receipt.
If a layaway purchase has been handled unsatisfactorily, California consumers can file a complaint with the California Department of Consumer Affairs or the local Better Business Bureau.
By Robyn M. Moltzen, Public Services Librarian