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Laying down the lay-by law

For us consumers, buying something on lay-by is a huge win. And because of the tough economic climate, lay-by has suddenly gone mainstream - retailers big and small are now offering lay-bys, because they’ll lose out if they don’t.

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No credit checks are necessary because the shop gets to hold on to the goods until they are totally paid off.

Lay-by allows consumers to choose an item - a pair of shoes, for example - and pay them off every month, with no interest added.

Listen to Wendy on the topic, or continue reading the details under the podcast.

According to the Consumer Protection Act, you can cancel a lay-by at any time, and must be refunded all payments you’ve made up to that point, minus just 1% of the retail price as a cancellation penalty. So if the shoes cost R1,000, the cancellation penalty is just R10 - virtually nothing.


Importantly, the stores must refund you - they can’t issue a credit note instead, locking you into buying with them again.

I must admit, as much as I champion consumer rights, I think the 10% cancellation fee - which was legal before the CPA reduced it to just 1% - was fairer to retailers.

But no-one forces a company to offer lay-bys - if they think it doesn’t make financial sense for them, they mustn’t offer it as a payment option. It’s that simple.

That’s what I said to the owner of Rosewood Boutique this week when a man complained to me that when his wife tried to cancel her lay-by at the Phoenix Plaza branch - one of five Durban branches specialising in Eastern wear - she was told the cancellation fee was 15% AND the refund would be in the form of a credit note, not cash.

If you find out, when you go to cancel a lay-by, that the store’s cancellation policy is not compliant with the CPA, you can lodge a complaint with the Consumer Goods and Services Ombud.

Meanwhile, listen to past ECR Consumerwatch shows below.

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