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November 14, 2012

LITTLE ROCK - With holiday shopping season now in full swing, some Arkansas consumers may view a layaway plan as an attractive option for obtaining a must-have gift.

Many retail stores offer layaway purchase plans for those consumers who choose not to use a credit card but may not have enough cash on hand to buy a product. In a layaway plan, a consumer places a deposit on an item, then makes payments over time and receives the item once it is paid for in full.

Consumers considering layaway should understand the terms of the plan and ask questions before they enter into a layaway agreement, Attorney General Dustin McDaniel said. McDaniel issued this consumer alert today to help Arkansans avoid any potential problems with layaways.

"More and more retailers are offering layaway options for shoppers on tight budgets, but consumers should understand each merchant's layaway policy." McDaniel said. "Some policies may contain hidden fees or unexpected restrictions that would make other methods of purchase more practical."

Layaway plans make the most sense when the consumer is trying to secure a hard-to-find or unique item. For merchandise that is generally available, the consumer will retain more flexibility by saving privately for the purchase.

Consumers who choose layaway plans should review retailers' written layaway policies. Those policies should indicate how much time shoppers have to pay for the merchandise, the minimum payments they must make and whether there are any extra charges for layaway items, such as a service fees.

Shoppers should know whether there are fees or penalties for missing payments or making late payments. In the event of a late or missed payment, it is possible that the layaway contract will be cancelled or merchandise will be returned to the store's inventory, depending on the retailer's policy.

Retailers' policies may differ as it relates to refunds, as well. Some retailers may be willing to give a full refund or store credit to consumers who change their minds about a layaway purchase, while others may charge a nonrefundable service fee.

Layaway plans are also offered by many online retailers - for merchandise and other items such as travel plans and tickets to sporting events - and McDaniel offered the same advice for handling layaway plans on Internet purchases.

When using layaway purchase plans, Arkansas consumers should remember to:
• Obtain the merchant's layaway policy in writing, and review all of the terms of the policy.
• Make sure to know the time allowed to pay for the item, when payments are due and the minimum payment.
• Be aware of hidden fees that may be assessed and ask whether there is a penalty or fee for late payments.
• Know the refund policy for layaway purchases.
For more information on layaway plans or other consumer-related issues, visit the Attorney General's Consumer Protection website at, or call the Consumer Protection Hotline at (800) 482-8982 or (501) 682-2341.