BBB®: Layaway tips for holiday purchases

This holiday season, retailers are trying to make it easier to pay for holiday gifts by offering layaway options. With layaway experiencing a comeback, your Better Business Bureau offers guidance on using this old fashioned payment plan in lieu of credit cards.

Many businesses are reviving their layaway programs. Kmart's layaway program saw double-digit increases in customers and sales in 2008. And according to The Record newspaper in New Jersey, consumers even used layaway to purchase school supplies and clothes—rather than just big-ticket items like TVs.

“Retailers are looking to entice customers by making it easier for them to make purchases this holiday season,” said Norman Wright, president/CEO of BBB|Northwest Florida. “Consumers are reporting that they’ll use layaway for everything from basic necessities to gifts and decorations this holiday season.”

Buying items on layaway is different from using a credit card; buyers aren’t charged interest and can’t take the item home until it is paid off. When utilizing layaway, buyers must typically make a down payment of 10 to 20 percent and pay any service or plan fees for the store to hold the item for them. Customers then have typically 30 to 90 days to make payments to pay off the balance. Once it’s paid off, customers can take the item home.

As a complement to in-store layaway, some stores provide layaway services through the retailer’s Web site. And now third-party businesses have set up layaway plans online between customers and retailers that don’t have a layaway program. Customers make periodic payments to the third-party layaway service provider. Once the item is fully paid for, the business buys the item from the retailer and ships it to the customer.

BBB advises consumers to get layaway details in writing and offers the following checklist of questions to ask:
Ø How much time do I have to pay off the item?
Ø When are the payments due?
Ø How much do I have to put down?
Ø Are there any storage or service plan fees?
Ø What happens if I miss a payment? Are there fees? Is the item returned to inventory?
Ø Can I get a refund if I no longer want the item after making a few payments?
Ø What happens if the item goes on sale after I’ve put it on layaway?
Ø Does the retailer or third-party layaway service have a good BBB rating?

BBB provides BBB Reliability Reports on nearly four million businesses across North America, both online merchants and brick-and-mortar stores. BBB Reliability Reports offer BBB’s unbiased evaluation and include a rating and complaint history. Free Reliability Reports are available at bbb.org.
For additional advice you can trust on being a savvy consumer, start with bbb.org.