Predatory 'Puppy Loans' Can Mean Financial Ruin for Some Prospective Pet Owners, Advocacy Groups Warn

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Can't afford to buy a puppy? Be careful about taking out a loan to do so, consumer and animal welfare advocacy groups including the National Consumer Law Center warn.

Animal welfare and consumer advocates are speaking out against a trend across pet stores that are offering high-cost loans in order for people to purchase puppies, CBS News reported.

Transportation Alliance Bank (TAB), based in Utah, is reportedly helping EasyPay Finance bypass interest rate caps on pet loans with annual charges that range from 130% to 189%, the National Consumer Law Center said in a report. The rates are reportedly illegal in most states for non-banks, but because the company is working with TAB, is considered a lawful bank loan.

The National Consumer Law Center said the practice, which is legal, is called “rent-a-bank,” CBS News reported.

The center is among the organizations petitioning to have the so-called rent-a-bank practice banned, calling it a predatory way for lenders to evade adherence to state-controlled interest raises.

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

Numerous people have reported finding themselves owing high amounts in interest after making several payments. People have also said they purchased dogs that ended up having issues that were not disclosed to them at the time of purchase. In such cases, it was not made clear if these were issues of which the pet stores were aware. 

The sale of dogs and cats in pet stores is already banned in some states, including Maryland and California.

"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 a senior director of the Stop Puppy Mills campaign at the Humane Society of the United States, said 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," he said.