What is a lay-by?

Section 96 of the Australian Consumer Law, which is set out in the Competition and Consumer Act 2010, defines a lay-by agreement as one between a supplier and a consumer for the supply of goods in trade or commerce, under which the goods won't be delivered until the total price has been paid, and the price is paid in instalments. The section sets out how many instalments make an agreement a lay-by, which depends on whether the agreement says it is one, and counts any deposit as an instalment.

The same section requires the supplier to make sure the agreement is in writing and transparent and that the consumer gets a copy, and a note to it says a pecuniary penalty may apply to a breach of the writing and copy requirement. The ACCC adds that the written agreement must set out its terms and conditions, including any termination fee, and that a termination fee is capped at the reasonable costs the business has in connection with the agreement.

The ACCC says a customer can cancel a lay-by at any time before receiving the goods. The business then refunds the deposit and everything else paid, less any termination fee in the agreement, and if the customer has paid less than that fee, the customer pays the difference. According to the ACCC, a business can cancel only if the customer has broken the agreement, for example by not paying instalments, if the business stops trading, or if the goods are no longer available for reasons outside its control.

• Mixing lay-by instalments in with the day's completed sales, so nobody can tell how much is held for goods still waiting to be collected.
• Selling goods set aside for a lay-by because they were left among the goods on display.
• Leaving the termination fee out of the written agreement, then trying to keep one when the customer cancels.
• Not updating the lay-by register when an agreement is cancelled, so a refunded customer still shows a balance.