Lenders push "predatory" puppy loans at pet stores across the U.S., group says

Consumer and animal welfare advocates are decrying high-cost loans they say are being offered at pet stores across the U.S. to help people buy puppies.

Ogden, Utah-based Transportation Alliance Bank, or TAB Bank, is helping a lending business called EasyPay Finance bypass state interest rate caps and make pet loans with annual interest charges of between 130% and nearly 189%, the National Consumer Law Center said in a report. Those rates are illegal in most states for non-bank lenders. 

But EasyPay issues its loans through TAB, allowing the money to be classified as bank loans exempt from state laws, according to the advocacy group. That practice is known as "rent-a-bank."

The NCLC is among those petitioning the Federal Deposit Insurance Corporation — the agency that supervises banks including TAB — to ban rent-a-bank lending schemes.

A separate coalition of consumer and civil rights groups earlier this month called on the FDIC to stop four Utah banks including TAB from being a "front for predatory lenders evading state interest rate limits." Those lenders include Carlsbad, California-based EasyPay, which worked with TAB to made loans of up to 188.99% APR through businesses selling auto repairs, furniture, home appliances, tires and pets, among other products, the group stated. 

"TAB Bank is misusing its bank charter by fronting for abusive loans that bleed consumers dry," Nadine Chabrier, policy and litigation counsel at the Center for Responsible Lending, said Tuesday in a statement. "Responsible merchants should stop peddling predatory EasyPay loans, and the FDIC should end TAB Bank's participation in this scheme."

The FDIC declined to comment. EasyPay and TAB Bank did not return requests for comment.

"I am at a loss"

Hundreds of consumers have complained on regulator and consumer websites about loans from EasyPay, also known as Duvera Billing Services, which describes itself as a consumer lending service that caters to auto-repair and retail stores. 

According to one complaint lodged with the Consumer Financial Protection Bureau in October 2020, a Florida couple buying a puppy priced at $3,000 agreed to the pet shop's suggestion that they apply for financing, which covered $2,200, leaving them to pay another $800 in cash.

Assured the puppy had all his shots and was in excellent health, they took him home that day. But the puppy soon displayed serious health problems that led to thousands of dollars of veterinarian bills and his death a year later. Duvera Billing Services "is reporting I owe $5,500 on my credit report due to interest," even after a year of payments, the complaint stated.

The case was marked as closed, with Duvera explaining that it "believes it acted appropriately as authorized by contract or law," according to the CFPB site.

An October 2021 complaint to the Better Business Bureau involved the purchase of a puppy at zero interest for 90 days, which then jumped to 79%. The dog owner described being stuck paying bi-weekly payments of $179, with only $34 going to the principal. 

"I am at a loss," stated the person, who noted he'll have paid $6,400 for his pet by the time the contract ends. 

Puppies for profit

Beyond harming consumers, the predatory puppy loans help finance what animal rights groups call puppy mills — high-volume dog-breeding facilities that churn out puppies for high profits. An estimated 10,000 such facilities provide the majority of pups sold in pet stores and online, according to the Humane Society of the United States. 

The sale of dogs and cats in pet stores is prohibited in California and Maryland, along with hundreds of communities, from Riverhead, New York, to Chicago. Elizabethtown, Kentucky, is among the latest to pass such an ordinance.

"Pushing financed purchases is just another way puppy mills and their pet store sales outlets get away with selling puppies for thousands of dollars to unsuspecting consumers, many of whom end up with extremely high interest rates and hidden fees they frequently cannot afford," John Goodwin, the animal welfare group's senior director of the Stop Puppy Mills campaign, stated in a news release. "Some pet stores have reported that 80% of the puppies they sell are financed, indicating that these predatory loans are a key part of the puppy mill to pet store pipeline."

The HSUS advises those looking for a dog to find a responsible breeder, but only after first checking animal shelters and rescue groups.