The Queensland Office of Fair Trading recently conducted a state-wide compliance operation which highlighted that several businesses were unaware of their lay-by obligations. Businesses mistakenly offer customers the opportunity to pay by instalments and do not realise that under law, such an agreement constitutes a lay-by which means there are extra rights for the customer.
An agreement is a lay-by if the customer:
- does not receive the goods until the full price is paid; and
- pays in three or more instalments or pays in only two instalments, but the agreement is called a lay-by (a deposit is considered an instalment).
Finance agreements, where the customer takes the good straight away and makes repayments are not lay-bys.
There are several rules you need to follow when offering lay-bys to customers:
- The consumer must be provided with a written copy of the lay-by agreement.
- You must ensure the agreement is transparent – it should be in plain English, easy to understand, and not contain purposefully obtuse or hidden clauses.
- The agreement must contain a description of the goods you’re selling, their cost, the length of the lay-by period, the amount of the payment and their due dates, and details of refund and cancellation policies.
- You may only charge a termination fee equivalent to your reasonable costs. Any left-over money paid by the customer must be refunded.
- You can’t cancel a lay-by unless the goods are no longer available for reasons outside your control. This means you can’t cancel a lay-by to try to sell the goods at a higher price.
Click here for more information on lay-by regulations.