By DAVID BERTOLA
dbertola@bizjournals.com | 716-541-1621

No money down, no payment for 12 months and zero percent interest are incentives that retailers have long used to lure consumers to their stores.

But they say a new law that went into effect earlier this year preventing stores from offering the "Three No's" hasn't produced a noticeable change in purchasing patterns.

According to www.creditcards.com, changes in federal law that became effective Feb. 22 added minimum payment requirements and warnings about what could happen if a balance went unpaid after the promotional period expired. The site says the Credit Card Act allows retailers to continue offering such plans, but they had to disclose terms more fully, apply payments in a certain sequence and offer the plans for certain time periods.

"Previous to this law, someone would be able to apply for a credit amount, put no money down and not pay for a year," said Custom Carpet Centers President Jay McDonnell, adding that his company had offered this as long as he could remember.

He likened it to an opportunity for customers to get free money at no cost.

"If you are going to spend $2,000 on carpet, and if you have the opportunity to pay in 12 individual chunks, you might be more inclined to make that purchase, or make a bigger purchase, and that's why it was good for the consumer," he said.

"You still have to make a minimum payment, but your interest is deferred," said Tim Schoonens, Crawford Furniture Manufacturing Corp.'s regional manager. He oversees operations at four Buffalo-area stores for the Jamestown-based company.

With the new law in place, however, the first payment with zero percent interest might be due within 30 days. And if a payment is missed, all the interest is owed.

Schoonens said doing away with the old model probably hasn't hurt business, since those who tend to finance and be approved to do so are those who have the money. He thinks standards to approve someone for credit, however, may have gotten tougher because of the poor economy.

"One of the reasons they did away with ‘no, no, no' was because there was no money coming in for a year. It was a luxury to do (it)," Schoonens said.

Mariann Ryan, manager of the FWS Home Furnishings store at 1738 Elmwood Ave. in Buffalo, said she has to make it clear to consumers that interest accrues every month, and that the interest is forgiven if the balance is paid during the promotional period. That's typically six or 12 months, she said, but it's not uncommon to have an 18-month or two-year period.

Ryan said that beyond tweaking the messages used to advertise financing options, not much has changed. However, she said customers generally prefer to make payments because they serve as a reminder of a big bill that needs to be paid.

"I think most customers feel comfortable making a payment. Even though there was no payment due (before the law), it was easy to forget about it," she said. "The payment forces them to look at the dollar amount."

Orville's Appliance Inc. President Mickey Reali said the programs have increased foot traffic at store locations, and they push customers to make purchasing decisions sooner rather than later. Since finance charges are usually paid for by the retailer, he wonders how some can offer five years at zero percent interest.

Without disclosing sales figures, Reali said his company's finance participation for the year is one-half of 1 percent of its total gross sales.