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Media > Newsletters > Consumer Advocate > December 2014 > Layaway Plans: What to Consider This Holiday Season

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Layaway Plans: What to Consider This Holiday Season

May companies offer layaway plans to help with the cost of the holiday season. This allows consumers to make installment payments on reserved items. Once the item is paid for in full, the consumer can pick it up. Before signing up for a layaway plan, consumers should understand all the terms and conditions. 
It is important to know the risks and all the fees associated with a layaway plan, which may include initiation or cancellation fees. Here are sample terms and conditions for a layaway plan:
· Service fee (5% or $10, whichever is greater, non-refundable)
· Deposit (20%, paid up front)
· Contract term (8 weeks)
· Cancellation fee (10% or $25, whichever is less)
For example, if a consumer purchased a product for $100 using the above sample terms, the service fee would be $10;the deposit would be $20. The weekly payment would be $10 for the eight-week contract, and the consumer would receive the item for a total cost of $110. If you canceled the agreement, the store would be entitled to a $10 cancellation fee in addition to the $10 non-refundable service fee you paid at the start of the plan. You would pay $20, but would receive nothing.
Under Ohio law, in a layaway plan for an item worth less than $500, stores are not required to provide a written contract to consumers, but they must give consumers written notice if they miss a payment. Consumers then have 10 days to make up the missed payment. If they don’t make up the payment in that time period, the store is entitled to $25 or 10%, whichever is less.
For layaway agreements of $500 or more, the store must provide the consumer with a written contract. If they want to cancel, consumers must do so in writing. They can cancel within five days with no penalty. After five days, if the consumer cancels or defaults, the store can keep up to 50% of the amount the consumer has already paid.
Follow these tips when signing up for layaway:
· Ask for a written description of the store’s layaway program before you agree to it, regardless of the cost of the items you place on layaway.
· Ask if you can get a sale price for an item if it goes on sale during the time you have it on layaway.
· Understand the terms and conditions of the layaway. Some stores only offer certain merchandise, or have days where layaways may not be available.
· Save all payment receipts, contracts, and related documentation until you receive your product.
· If a branch of a company shuts down, call the corporate headquarters and explain the situation, citing all necessary documentation.
If you suspect a scam or an unfair business practice, report it to the Ohio Attorney General’s Office at or by calling 800-282-0515.