Layaway grows in popularity, but there are risks

During challenging economic times, layaway can become increasingly popular, but relying on layaway can mean risking the loss of your money, or the item itself. In the last year, the Better Business Bureau received complaints about layaway programs from consumers across the country.

"Layaway has made a huge comeback because consumers avoid high interest fees, but, there are some risks that consumers should be aware of, such as the company going out of business," said Claire Rosenzweig, president of a BBB in New York.

Some of the complaints to the BBB included not being able to get a refund if the customer changed their mind, only store credit, or that restocking fees of 10 percent or more applied. Other complaints stated that after the last payment, delivery was delayed if the product was out of stock and had not yet been ordered, pushing delivery back by weeks or even months. And other shoppers who ordered the product were in some cases given preference ahead of layaway customers, also pushing back the delivery time, even if all payments had been made. Other catches can include service fees, or cancellation fees as high as $150.

If you use layaway this holiday season, ask for a written contract and read it carefully. The BBB suggests you be clear on the following details:

• Is there a service fee, and if so, how much, and is it refundable?
  
• Check for how long the item can be on layaway. Some items have a time limit, and are returned to store shelves once that deadline hits.
  
• Will the item be placed in a holding area until all payments are made? If not, it could be inadvertently sold to another customer.
  
• Is there a specific date when each payment must be made? The contract may specify that if a payment is not made on time, the layaway item can be sold to another consumer.
  
• What is the company's refund policy? Will only store credit be issued, and is there a restocking fee?
  
• If putting a product that is not in stock on layaway, is the product ordered when the layaway is opened or when the last payment is made? Delivery timeframe should be agreed to up front.

For smart shopping advice see 5 Tips to keeping holiday spending in check, and you can also check out a business before you decide to use its layaway program by visiting the BBB.

Previously: Walmart holiday shopping: The return of layaway

Use layaway,don't let it use you [BBB]

—Maggie Shader