Wendy Knowler’s lowdown on lay-by

Wendy Knowler’s lowdown on lay-by

Lay-by is a wonderful, consumer-friendly way to buy stuff if you don’t have enough cash to buy outright. 

Lay-by image

Listen to today's Consumerwatch feature below, or read the full story under the podcast:

Provided you’re not into instant gratification, that is, because unlike buying on credit, you don’t get the outfit, pair of shoes, laptop or piece of jewellery until you’ve paid for it in full.

But there are two very big advantages:

  • You don’t pay any interest;  and
  • You can change your mind and cancel when you’re still paying the item off; the shop must refund you what you’ve paid in total up to that point - minus just 1% of the purchase price - as a cancellation penalty. That’s been the case since the Consumer Protection Act came into effect seven years ago.

The problem is, many retailers don’t do lay-by the CPA way - either intentionally or because they haven’t bothered to find out what laws apply to their business.

For example:

Johnathan Naidu and his fiancé picked out a R7500 bridal outfit at Bombay Creations in Mount Edgecombe for their upcoming wedding. Naidu says it was a sales clerk who suggested a lay-by. They paid R1000 at the end of January and another R1500 a month later. And then their financial situation changed suddenly and they decided to cancel the lay-by.

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“I asked the owner if we could perhaps take another outfit for the value of the R2500 we had already paid as we couldn't afford to continue with the lay-by,” Johnathan told me.

They were told that wasn’t store policy, and nor was a refund. They’d just have to forfeit the R2500 as that was store policy.

“I tried to tell them that the CPA requires them to refund what we’d paid, minus that 1% cancellation penalty, which was R75, but they didn’t want to know.”

At that point Johnathan turned to Consumerwatch for help.

I contacted Bombay Creations director, Devesh Ramkisson, who said he didn't realise that the CPA stipulated how companies had to do lay-bys. 

So I sent him the relevant sections of the Act, and he checked this out with the KZN’s Consumer Affairs division before inviting Johnathan to return to the store for a refund.

“And I won’t even deduct that 1% cancellation penalty,” Ramkisson said.

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On Saturday Johnathan went back to the store and got his money.

Ramkisson told me that the store’s policy on lay-bys had since revised to comply with the CPA.

Good to know.

Let’s hope all the other companies offering their customers lay-bys get the message too.

No one forces companies to offer lay-bys. If they choose to, they must do it legally. Not with terms and conditions they think are appropriate such as no refunds.

Before you sign a lay-by deal - ask the store about their terms and conditions. And if it includes words such as “no refunds” and “forfeit your deposit”, don’t sign.

For more info and consumer advice, follow Wendy Knowler on Facebook here.

Or visit her website.

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