Layaway Policy Laws

Some stores will remove a layaway item from display inventory to prevent another customer from purchasing it.

A layaway is a service provided by a retailer for the convenience of consumers. It allows the consumer to place an item on reserve by making a deposit and agreeing to pay for the item in installments. The United States has no federal laws governing layaway plans. The Federal Trade Commission (FTC), however, forbids deceptive business practices, and it is illegal to fail to disclose the terms of a layaway plan. Many states have consumer-protection laws that can be applied to layaway plans.

State Layaway Laws

At the time of publication, eight states and Washington, D.C. have laws with specific provisions for layaway plans. The states are California, Illinois, Idaho, Massachusetts, Maryland, New York, Ohio and Rhode Island. New York City has its own law governing layaway plans.

California Law

A California retailer must provide layaway customers with a written agreement. The agreement must include the amount of the deposit, the length of time the goods will be held and the purchase price with an itemization of any additional charges. The agreement must also state that all payments will be refunded if the goods become unavailable.

Ohio Law

In Ohio, the store must issue a written agreement if layaway merchandise costs more than $500. The agreement must include the purchase price and a payment schedule showing additional charges such as taxes or services fees. The agreement must include a provision for a full refund if you cancel the purchase in writing within five days. If you cancel within five days, the agreement must also allow you a store credit or a refund of at least half of your payments.

Protect Yourself

Before entering into a layaway plan, review the merchant's policies and procedures. In particular, note how much time you have to complete the payment plan, when each payment is due, the minimum payment required, whether there are penalties for missing payments and the service charges, if any.

References

• Justia US Law: 2010 California Code Civil Code Title 1.4. Layaway Practices
• FTC: Layaway - Another Way to Buy (PDF)
• Indiana Department of Financial Institutions: Layaway Purchase Plans (PDF)
• Better Business Bureau: Layaway Law - Ohio

Resources

• SBA: Federal and State Laws that Govern Layaway Practices