Layaway Is Out of Control

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The competition for layaway shopping this holiday season is getting fierce.

It's making me sick.

Sears Holdings' (NAS: SHLD) beleaguered Kmart concept paid up for a promoted Twitter tweet yesterday. The company's KmartDeals Twitter account is offering a $5 or $10 e-gift card for layaway orders placed through the end of this week.

It seemed like a deal that was too good to be true, so I dug a little deeper.

Kmart offers a layaway plan where shoppers can prepay for items over the course of eight weeks, picking them up once their final payment is made. Gee, eight weeks from would be after Christmas. Right? Sorry Santa. I guess you can call this sleigh away.

However, that's not what irks me, since folks can just pay up early. Kmart is touting a small online gift card to Twitter users -- cleverly leading to an additional purchase down the line -- but there's no free lunch here. Apart from prepaying for merchandise and not getting any accrued interest there's a $5 service fee when initiating a new order (or $10 for the 12-week layaway plan). If you wind up somehow buying the item elsewhere or you can't make the payments there's a $10 cancellation fee.

So much for the value of that e-gift card!

This is apparently the season for Thanksgiving night operating hours and layaway. Wal-Mart (NYS: WMT) , which had abandoned its layaway practice several years ago, got back into the game last month. It also charges a $5 service fee, all for the right for folks to prepay for an item.

Why isn't there more outrage over this? Bank of America (NYS: BAC) got raked over the coals when it wanted to make back some of its lost profits by charging debit card users a monthly fee. Occupy Wall Street played a part in silencing that wave, so why is layaway getting a free pass?

Oh, and shame on Kmart for promoting this e-gift card offer -- essentially covering the service fee --through Twitter. Something tells me that most holiday shoppers that need layaway as a disciplined saving program aren't on Twitter to learn about this online deal -- and much less registering for Sears Holdings' Shop Your Way Rewards program as required for the e-gift card promo.

I know which retailers are getting my lump of coal this season.

I would propose an Occupy Kmart protest to vent, but something tells me that store managers would freak out if there were actual people in some of the woefully outdated stores.

At the time this article was published The Motley Fool owns shares of Bank of America and Wal-Mart Stores.Motley Fool newsletter serviceshave recommended buying shares of and creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributorRick Munarrizcalls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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