Critics say layaway programs amount to "hideaways for sky-high interest rates"

It's not too early to start shopping for Christmas, at least as Walmart sees it.  The giant retailer is bringing back its Christmas layaway program this year. Available nationwide Sept. 16 through Dec. 14, layaway at Walmart gives families an extra month to shop. 

"Last year, millions of Americans relied on layaway at Walmart to provide a great Christmas for their families. Because of their feedback, we're offering the service again this year and making it better than ever," said Duncan Mac Naughton, chief merchandising and marketing officer, Walmart U.S.

Not everybody thinks this is exactly a gift.

"These layaway programs are nothing more than hideaways for sky-high interest rates that consumers would never tolerate with a credit card," said Senator Charles E. Schumer (D-NY) as he lambasted Walmart last year. "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, under the guise of making it easier and more affordable to shop."

Citing the prospect of layaway fees that are the equivalent of an 81% credit card APR for a $100 purchase, Schumer called on the Retail Industry Leaders Association (RILA) and the National Retail Federation (NRF) to work with member stores to clearly and prominently display the sky-high interest rate equivalent of the fees these programs charge so that consumers are better informed about the total price they're paying.

Schumer said last year that if merchants didn't more fully disclose the fees associated with their layaway programs, he would ask the Federal Trade Commission (FTC) to get involved.

There's not much evidence that's happened, although the FTC does offer some advice for layaway shoppers on its website, consisting mostly of reminders to read the layaway program's terms carefully. An excerpt:

Look for details on:

the terms of the layaway plan: how much time you have to pay for the merchandise or service; when your payments are due; the minimum payment required; and possible charges for using the plan, like a service fee. Find out if there is a fee or a penalty for missed or late payments: Will your contract be cancelled? Will the merchandise be returned to inventory?

the refund policy: If you decide you don't want the merchandise after you've made some or all the payments, can you get a refund? Retailers' policies may differ: some give you all your money back; others may charge a non-refundable service fee; still others may offer a merchant credit for the amount you paid.

For its part, Walmart notes that terms and conditions of its layaway program may vary from one state to another. Details of the program's open fees and refunds can be found at www.walmart.com/Layaway.