(Hartford, CT) – Today, on one of the busiest shopping days of the year, Senator Richard Blumenthal (D-CT) warned Connecticut consumers of the real, hidden costs of once-popular retail layaway programs that have been brought back by some large retailers such as Wal-Mart and Toys “R” Us. Blumenthal, joined by Connecticut consumer advocacy groups, called upon retailers to prominently and accurately display layaway fees so that consumers have the information they need to decide how to pay for gifts they purchase this holiday season.
“Layaway plans are a gift that keeps on taking,” said Blumenthal. “Consumers deserve to know the outrageous sky-high interest rates concealed by retailers who call them fees. Better options exist – including credit cards – and consumers should make informed choices. In tough economic times, retailers are exploiting hard-hit consumers who may be desperate or deceived or both. These layaway plans, disguised in Santa suits, should show the real life Scrooge inside. If the retailers fail to come clean with complete information, I will ask the Federal Trade Commission to investigate.”
A shopper purchasing a $69 Rock ‘n Roll Elmo doll on layaway at Wal-Mart would be required to pay a $5 service fee for the payment plan, a 10% down payment, and the final payment by December 16th. This shopper pays fees equivalent to interest payments for a credit card with a 105% Annual Percentage Rate (APR). If the buyer doesn’t complete the purchase by December 16th or decides that the item is no longer needed, he or she would lose the $5 service fee and would be assessed an additional $15 fee.
The Senator urged large retailers and retail association members to be more forthcoming about the costs associated with their layaway programs by displaying fees as an APR equivalent. If they do not agree to disclose these fees as APR equivalents, the Senator added that he will ask the Federal Trade Commission (FTC) to examine the programs to determine whether they are deceptive and misleading to consumers.