Aug. 20, 2012 at 11:43 AM ET
Saying its customers continue to be concerned about unemployment, day-to-day expenses and rising gas prices, Wal-Mart Stores Inc. announced changes to its holiday layaway program, including an extra 30 days to pay and a refund of the $15 opening fee for customers who complete all their payments.
Last year, Wal-Mart re-launched layaway after a five-year hiatus; for $5, customers could open an account and have 60 days to pay off purchases in electronics, toys and jewelry.
Wal-Mart U.S. chief merchandising and marketing officer Duncan Mac Naughton said the company made program changes like the addition of small appliances and large sporting goods in response to customer feedback. He said Wal-Mart extended the program after customers said they needed two additional two-week pay periods to finish making payments.
The program begins Sept. 16, but customers who "like" their local Walmart store on Facebook will be able to start two days earlier.
This year, opening an account costs $15, but customers who complete all their payments will get that $15 refunded on a Wal-Mart gift card. Mac Naughton declined to say how many customers last year failed to finish making payments. He said a “distinct majority” of the millions who used layaway did complete their payments. This year, Wal-Mart is eliminating the $10 cancellation fee customers last year had to pay if they dropped out partway through.
During and after the recession, layaway experienced a renaissance of sorts, with retailers like Sears promoting it as an alternative for customers who couldn’t or didn’t want to put holiday purchases on credit cards. The practice hasn’t been without controversy, though. In an Op-Ed article in the New York Times last year, Cornell University history professor Louis Hyman argued that layaway was a “bad deal for everyone — except Wal-Mart.” Hyman said that the fees combined with the short repayment period added up to the equivalent of a predatory APR.
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