For shoppers, layaway plans are popular again

Remember the layaway plan?

It seems they're still popular with some shoppers and getting to be more popular among online shoppers, as well.

The idea behind the layaway purchase is for a store to hold a particular item that you want to buy while you make the payments over time. At the end of that timeframe, the item is paid for (sometimes with a layaway fee), and it's yours.

It's one way to buy something without incurring the interest expense of a credit card, or putting a big one-time dent in your wallet.

Over the past few months, I must admit I've noticed some shoppers asking store clerks if the business offered a layaway plan -- everywhere from a music store to a discount retailer.

Of course, many large retailers and discounters have always offered layaway plans. The increase in interest may be a sign of this troubled economy, as consumers try to lower credit-card debt or limit their purchases to those things they can truly afford.

As long as you allocate the money to make the installment payments, the idea sounds pretty consumer friendly. The "newer" layaway plans offered by online retailers are a bit more complicated. Some retailers may handle the layaway process, but a growing number are using third-party online payment services. Typically, once you've made the payments, the online service pays the retailer and then you receive the product.

Howard Schwartz, communications director with the Connecticut Better Business Bureau, says reading the fine print is always important.

"Layaway plans go back to the 1950s," he says. "It's not a new idea, but because of the economy and certainly with Christmas approaching during a period of widespread economic distress, the concept is coming back strong and large retailers seem to be offering it again."

Schwartz says that consumers "should understand all of the terms ... or they can end up with a huge headache and be very unhappy."

The Federal Trade Commission, along with the Better Business Bureau, offer some basic consumer alerts for all layaway plans, and they're worth noting. Among them:

• Understand the plan: You need to find out how long the payments will be, when they're due and what the minimum payment would be.
• Check out any fees: Find out if there are charges or special service fees (especially online fees), because those will increase your cost. You should ask the merchant if the layaway plan can be canceled and if the merchandise can be put back into its inventory.
• Find out about refunds: If you change your mind, or simply can't afford the item, ask the retailer or merchant if you can get a refund. As with many exchange or return policies, they differ from store to store. Sometimes you get your money back, or sometimes there's a service, or re-stocking, fee -- or you simply might be offered a store credit.
• Deal with reputable businesses: This is wise advice no matter what you purchase or how you buy it. If you're uncertain, check with this state's consumer protection agency (www.ct.gov/dcp) or the Better Business Bureau (www.bbb.org). It never hurts to be a cautious consumer.
• Keep your records: This is always wise advice. It's difficult these days to do so, because it seems every transaction -- from the grocery store to the cell-phone store -- creates a boatload of paper receipts. But in the case of a layaway plan, a record of these payments will be helpful in case of any problems or questions.

In addition, the Federal Trade Commission has a toll-free number to call for information or consumer queries at 1-877-FTC-HELP. The federal agency points out that layaway plans aren't specifically covered by federal law, but the organization is responsible for any illegal or deceptive sales practices.

Anthony Cronin writes a personal-finance column for Grace magazine and also is The Day's business editor. He can be reached at a. cronin@theday.com.