Layaway Plans

Laws That Affect Layaways

There is no federal law that specifically governs layaway transactions. However, you should be aware of two federal laws-the Federal Trade Commission Act and the Truth in Lending Act- that could affect a layaway plan. 

Federal Laws
The Federal Trade Commission Act prohibits unfair or deceptive acts or practices in or affecting commerce. Failure to disclose important terms of your layaway plan under certain circumstances may violate the Act.

Layaway plan may be covered by the Truth in Lending Act if the plan requires the customer to agree in writing to make all payments until an item is paid in full. If the plan does not bind the customer in writing to complete the layaway purchase, then the Truth in Lending Act does not apply. For further information about the requirements of the Truth in Lending Act, contact the Federal Trade Commission.

State and Local Laws
Some state and local laws specifically apply to layaway purchases. These laws vary widely in what they require. In addition, most states have general consumer protection laws that may apply to layaways.  Contact your state or consumer protection agency, or the state attorney general's office to find out what, if any, state laws apply to a law away plan.

Cancellation and Refund Policies
Consumer should always get all cancellation and refund policies and information in writing.  Retailers use a number of different refund policies for layaway cancellations, including full or partial refunds or only a credit towards a future purchase.  Some companies may have a cancellation charge.

Payment Plans
If a specific amount of money is required to be paid at set intervals (for example, every two weeks), or require payments to be completed within a set period of time (for example, within 60 days of the start of the layaway), it is important as a layaway customers to know the exact requirements. You should always get a disclosure that includes:

•  the required payment amounts;
• the dates when payments are due; and
• the date when the final payment must be made, if applicable.

Location of Layaway Merchandise
Customers who buy merchandise on layaway may expect that the item will actually be "laid away''-physically separated from stock available for sale. Many retailers remove layaway articles from the sales floor; others keep large items, such as furniture or major appliances, on the sales floor but mark them "sold." Therefore, you should find out what the company's policy is or where the layaway merchandise will be held or stored.

Availability of Merchandise
If the merchandise must be ordered, you should know when and under what circumstances it will be ordered and get this information in writing.  Does the retailer require a specific amount to be paid prior to ordering the merchandise?

Identification of Merchandise
Because several months may elapse between the time a layaway purchase is started and the time the merchandise is picked-up, you or the merchant may not always remember all the details about the merchandise you purchased.

To help avoid or prevent potential confusion or problems about the particular merchandise selected, you should require that the merchandise ordered be identified on the layaway sales receipt or contract. The sales receipt/contract should clearly describe the item(s) using identifying characteristics, such as, stock number, model number color, size and trade name or manufacturer.

Things to Remember
There are some particularly important aspects of layaway plans to remember, these include: cancellation and refund policies; payment plans; service or layaway charges; and the location, availability, and identification of layaway merchandise.

• Get all cancellation and refund policies in writing;
• Have the required payment amounts, the dates when payments are due, and the date when the final payment must be made in the sales receipt or contract.
• Have a specific description of the merchandise made part of the sales receipt or contract
• Know where or how the merchandise will be located or stored.
• Keep all receipts and proof of payment