Offering Layaways |
Table of Contents If you offer layaways, or are thinking about doing so, you may find this booklet helpful in avoiding potential misunderstandings with your customers. The booklet discusses laws that affect layaways and describes various features of layaway plans. It suggests how you might communicate to your customers important information about your layaway plan, and it contains a checklist of suggested layaway disclosure information and a sample layaway receipt. You may wish to use this information to develop your own layaway form or to review the layaway procedures you now are using. If, after reading this guide, you have questions about layaways, write to the Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580, or contact the FTC regional office nearest you. The addresses and telephone numbers of the regional offices are listed on the back cover of this booklet. There is no federal law that specifically
governs layaway transactions. However, you should be aware of two federal lawsthe
Federal Trade Commission Act and the Truth in Lending Act that could affect your
layaway plan. In addition, you should be aware that layaway practices could be affected by
state or local laws. Federal Laws Your layaway plan may be covered by the Truth in Lending Act if you require your customers to agree in writing to make all payments until an item is paid in full. If you do not bind your 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 There are good business reasons to give your
layaway customers written disclosures: they help assure that customers understand
their payment obligations; they give notice to customers of your
layaway policies; they help ensure that all customers receive
the same information; and they help prevent misunderstandings and
disputes. Important Matters to
Disclose Cancellation and Refund
Policies Retailers use a number of different refund
policies for layaway transactions. Some give full or partial cash refunds if layaways are
not completed. Others give credit toward future purchases. State law may dictate what
refund policy you must follow. When you describe your cancellation and
refund policy, use clear, simple, and direct language. For example, if you give full
refunds, you might say: XWe will
refund all money you have paid. If you do not
give full refunds, clearly state how much, if anything, you will charge for the incomplete
layaway transaction. However, you should check the laws in your state. Some states limit
the amount retailers may charge. If you give only partial refunds, you might say: XWe will
refund all money you have paid, If you do not
give cash refunds, but give credit toward a future purchase, you might say: XWe will
credit all money you have paid toward a future purchase. By disclosing
refund information, your customers will know what to expect if they do not complete the
layaway purchase. Payment Plans the required payment amounts; the dates when payments are
due; and the date when the final
payment must be made, if applicable. While the dollar amount, the
number, and sometimes the frequency of payments may vary with the cost of the purchase,
you may want to develop a standard payment disclosure format. For example, your layaway
sales receipt might say: Your payments of at least $______ are due on the day
of each month, for months, beginning . Final payment is due by ______. Vague
descriptions of payment terms will not help your customers understand your policy. Three
such vague but commonly used phrases are given below, along with reasons why they are
inadequate: X Payments are due every 15 days. Inadequate
because: This does not tell your customers when their payments start, when the next
payments are due, nor when the final payment must be made. X Payments must be made in three Inadequate
because: This does not tell your customers the beginning or ending dates of their layaway
plan, nor give the exact dollar amount they must pay each time. X Final Payment is due in three months. Inadequate
because: This does not tell your customers the required payment amounts, the dates when
payments are due, nor the date when final payment must be made. Some other retailers will let a
layaway completion date go by, particularly if the payments are almost complete. As a
reminder, such retailers send notices to their customers giving them a new date when all
payments must be completed. If you have such a policy, you may want to use a notice that
says: Service
or Layaway Charges XThere will be
a layaway charge of $_______. If any other
charges, like shipping, are imposed, informing your customers with a similar statement is
helpful. Location of
Layaway Merchandise XLarge layaway
purchases will remain on the sales floor but will he marked "sold." Availability
of Merchandise Identification
of Merchandise To help avoid potential
confusion about the particular merchandise selected, you may want to identify the layaway
item on the layaway sales slip. Clearly describing the item s identifying characteristics,
such as color, size, stock number, model number and trade name or manufacturer, may
prevent misunderstandings when the customer makes the final payment and is ready to claim
the layaway merchandise. For example, you might identify a dress purchased on layaways as: Common
Ways To Disclose Terms To avoid misunderstandings.
always try to say who will do what on your sales receipt. This will let your customers
know specifically what they must do to fulfill their part of the layaway transaction.
Clear examples, short sentences, and easy-to-read type will help to convey your message. If you post your layaway terms
on a sign in your store, the sign (or signs) should be placed in an appropriate and
conspicuous location (or locations), and the message should be clear and large enough to
be read from a distance. Checklist and Sample Layaway
Sales Receipt Layaway
Checklist A description of the
merchandise to be purchased? The total price of the
purchase, including any service, layaway, or other charge? The minimum amount of each
payment? Dates when payments are due? The date when the final
payment must be made? Your cancellation and refund
policy? Information about how
refund or credit amounts are determined? Notice to the customer about
whether the selected item will be separated from other merchandise? The time when the item will be
ordered, if it is not already in stock? Layaway Sales Receipt The following section indicates
how you can disclose important layaway information in a clear and understandable way. You
may wish to use this form to revise or draft your own receipt. Your Store Refund Policy |