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Federal and State Laws that Govern Layaway Practices

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Federal and State Laws that Govern Layaway Practices

By JamieD
Published: December 28, 2009 Updated: September 3, 2015

The Small Business Cents blog recently featured payment options for small businesses. Another alternative to traditional card or cash payments is a layaway plan. Layaway plans typically require customers to pay a deposit, generally a percentage of the total price for an item, and make additional payments until the total cost is covered. Retailers agree to hold the item for the customer until the payment plan is complete, at which point they can take home their purchase. Check out this quick guide to understand what laws do and do not affect layaway policies.No federal laws specifically govern layaway practices. Laws that may affect layaway plans include:


  • Federal Trade Commission Act -


In some circumstances, failing to disclose terms of your layaway plan may violate the Act. For more information, check out the specific terms of the FTC Act.



  • Truth in Lending Act -


Layaway plans that require customers to agree in writing to make all payments until an item is paid in full are covered by the Act. For more information, check out the specific terms of the Truth in Lending Act. Several state and local governments have laws that govern layaway practices. Laws very from location to location and while some states may have strict laws, others do not enforce any laws related to layaway. The following states and cities currently have laws that govern layaway plans:

Most states have general consumer protection laws that can be applied to layaway plans. Visit your State Attorney General's Office* or local Consumer Protection Agency for more information.

For more information on layaway plans that do not relate to federal and state governments, check out these FTC guides:

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