Will it be cash or credit? Why not Layaway? For retailers that offer customers a Layaway option, this guide contains a checklist for layaway disclosure and a proof template. The advent of Layaway came during the Great Depression of the 1930s. However, it fell out of place in the 1980s, as the ubiquity of credit cards reduced its usefulness. In September 2006, Wal-Mart discontinued its Layaway service in all stores, due to declining demand and rising implementation costs. According to the Securities and Exchange Commission, the seller is unable to account for revenue from a layaway situation until it delivers the goods held to the customer. By that date, all cash funds received by the client should be recorded as liabilities. Consumer secured financing is a type of credit similar to Layaway, which allows consumers to purchase items on a payment plan regardless of their credit history. Retailers use a number of refund guidelines for Layaway transactions. Some give cash refunds, in whole or in part, if the layaways are not completed. Others make credit for future purchases. State law may prescribe the refund policy you must follow. If you offer Layaways or think about it, you may find this brochure useful to avoid any misunderstandings with your customers. The Federal Trade Commission Act prohibits unfair or deceptive acts or practices in or affecting trade.
Failure to disclose the important terms of your Layaway plan in certain circumstances may be contrary to law. The information contained in this brochure should enable you to avoid such potential infringements. A Layaway order is cancelled if the customer does not pay a minimum monthly payment before the end of the additional seven-day period assigned at the expiration of each month. In the event of a layaway expiration, all items in the Layaway order are returned to stock. The first deposit and any subsequent payments will not be refunded. A shop credit is issued when the item(s) are eligible for such compensation. For more information about store credit, see the paragraphs titled “Forfeited Layaway.” During the 2008 global financial crisis, loans became scarcer, with more and more customers failing to meet their financial obligations. Banks have also been bankruptBankruptcy is the legal status of a human or non-human entity (a company or government agency) unable to repay its debts to creditors. and they have not been able to collect stranded debts and offer new loans to their customers.
Stores like Walmart resumed Layaway services in 2011 due to customers` growing financial difficulties and the need to increase declining revenues. Layaway programs also benefit retailers by allowing them to offer products to low-income customers as a kind of savings plan. As the customer has already committed to buying the product on Layaway, he or she cannot succumb to the temptation to spend that money elsewhere. . . .