With many consumers still feeling the effects of the slow economy, many retailers have begun introducing layaway programs to help customers pay for items in an installment basis. However, according to some, the fees imposed by stores is leaving some lawmakers worried about undue hardships for buyers.
U.S. Senator Charles Schumer, a Democrat from New York, said that some stores were charging as much as $5 in layaway fees and a 10 percent down payment. In a recent statement, the lawmaker asked retail trade associations to ensure that members are more clear about the added money required to use the service.
“These layaway programs are nothing more than hideaways for sky-high interest rates that consumers would never tolerate with a credit card,” Schumer said of the merchant services issue. “The holiday season is supposed to be about giving and not taking, but these layaway programs are taking advantage of people and charging them outrageous interest rates.”
In a recent op-ed for the New York Times, Cornell University Professor Louis Hyman said that some shoppers using the program would be paying the equivalent of a 44 percent interest rate if paying with credit cards.Back To Blog