Millie Hill said it was love at first sight as her husband of 50 years held a pint-size Chihuahua puppy at a Puppyland pet store last summer.
When she sat down to look at the paperwork a few days later, Millie Hill quickly realized her mistake: The bundle of high-interest loans she’d signed would eventually swell to a total cost of more than $19,000.
“I felt betrayed. You don’t expect this from people who sell animals and love animals,” said Millie Hill, 85, whose husband died in November. “This should not be allowed; it should be illegal.”
A growing chorus of state legislatures agree and are taking action to outlaw high-interest loans and leasing arrangements from brick-and-mortar and online pet stores. The deals can leave pet owners on the hook for double or triple the cost of an animal and can cripple the credit of those who can’t pay up.
Illinois banned the high-interest loans this year and California Gov. Gavin Newsom (D) signed a bill on Monday that generally prohibits online pet stores — regardless of location — from being involved in financing the sale of dogs, cats or rabbits
Another 10 states have banned retail pet stores from offering leasing plans that are similar in cost and structure to car leases, meaning a failure to pay could result in a pet being seized.
“They are preying on people who are making an emotional decision,” said California state Rep. Brian Maienschein (D), who sponsored the bill. “These are not reasonable loans, the terms are predatory, in some cases doubling the cost of the pet. That’s absurd.”
The founder of Puppyland, which has six stores in four states, defended the company’s practice of using finance companies that offer the high-interest loans, arguing that it gives pet owners more flexibility.
“These interest rates are not unique to Puppyland and Puppyland has no control over the interest rates our customers receive when working with 3rd parties for financing,” Kayla Kerr said in a statement, adding that the company has no plans to change its loan policies. “If we were to suspend this option, it essentially narrows the choice for the customer and we would not want to do that.”
EasyPay Finance, a company that offers high-interest loans through pet stores across the nation, said they allow customers who might otherwise not qualify for a traditional loan to buy the pet of their choice. The company says its loan rates can be as high as 199 percent.
“Many Americans are left behind by the traditional banking and credit system. EasyPay facilitates financing options to ensure that these consumers have a trusted and secure choice to access otherwise unavailable credit for pressing needs and discretionary purposes,” a statement from the company said, adding that it offers “a range of credit tiers based on a borrower’s credit profile.”
Mike Bober, president of Pet Advocacy Network, a trade group that represents pet stores, declined to comment on the use of high-interest loans, saying, “This issue has been raised to us before, but our position is that it is outside the scope of pet care.”
Some states are going a step further, banning the sale of dogs — and sometimes cats and rabbits — from retail pet stores altogether. Backers say in addition to costly loans, consumers often end up with pets that have myriad costly and stressful health problems. So far, five states have enacted these pet store bans, and New York may join them if the “Puppy Mill Pipeline Bill” — passed by the legislature in June — is signed by Gov. Kathy Hochul (D).
Bober criticized those measures, arguing they do nothing to improve the quality of pets and hurt small businesses.
“It’s not that these bills are affecting breeding conditions anywhere, especially with the unlicensed illegal breeders,” he said. “Instead, what it’s doing is creating situations where small, local businesses cannot remain open.”
Pet stores that sell expensive dog breeds have offered traditional financing options to customers for decades. However, loan companies acknowledge that the newer, high-interest loans are aimed at customers with no or poor credit. And customers and animal rights groups say the loans are pitched by sales staff as affordable by focusing on the cost for monthly payments versus the overall price of the dog. These practices have allowed pet stores to sell breeds that cost thousands of dollars — such as French bulldogs — at prices far higher than private breeders charge due, in part, to impulse buys as people browse pets.
The Humane Society, Animal Legal Defense Fund, National Consumer Law Center and other groups say complaints about triple-digit loans or leasing options have risen over the past several years. In February, the groups formed a coalition to raise public awareness and to apply pressure on government officials and agencies.
Congress has also taken action to close a loophole that enables the high-interest loans. Last year, President Biden signed a bipartisan resolution to repeal a Trump-era rule that made it easier for finance companies to make loans that exceed state interest rate caps, saying the system was set up to “allow lenders to prey on veterans, seniors, and other unsuspecting borrowers .... trapping them into a cycle of debt.”
A congressional bill was introduced in 2019 and again in 2021 that would provide a permanent, national solution by setting a 36 percent interest rate cap that covers all lenders, including banks. The bill has stalled under intense lobbying by the financial industry.
The lending and leasing practices have persisted despite rolling back the Trump-era rule, prompting several state attorneys general to take legal action against some of the pet stores and financing companies.
Massachusetts Attorney General Maura Healey (D) called pet leasing an “exploitive practice” when she announced a $930,000 settlement in April with a finance company that also agreed to waive consumers’ outstanding debt. Maryland Attorney General Brian E. Frosh (D) announced a settlement in August with a pet store that agreed to pay veterinary care or refund consumers who bought dogs with medical conditions. And the Hills’ case and others in Washington have triggered an inquiry by state Attorney General Bob Ferguson (D).
The state attorneys general probes have limited impact, however, because the investigations tend to focus on a singular finance company or pet store and can only protect consumers within their own states.
“Right now, this is a whack-a-mole approach that goes by lender and by state,” said Rachel Gittleman, a financial services outreach manager with the Consumer Federation of America. “Since most of these lenders operate online, it can be difficult to even find them. There isn’t some storefront operation that you can easily find.”
When Jennifer and Jeff Bowman spotted a brindle-colored English bulldog in a Petland pet store in Iowa City in 2019, the couple asked a sales clerk if they could meet the dog they would later name Zeke.
Zeke snorted and kissed them and the couple asked what it cost to take him home. The price tag — $4,400 — triggered immediate sticker shock.
However, the couple said a Petland employee told them financing options were available that would ensure a low monthly payment. They would just have to fill out a loan application.
State interest rates are capped at 36 percent in Iowa, so the Bowmans weren’t overly concerned — until they got home and saw that the 90-day interest free loan from EasyPay had an explosive clause in it. If they did not pay off the loan within that time, according to financial documents reviewed by The Washington Post, the interest rate would rise to 188.98 percent.
“We were worried about how much it would cost and, while we were talking about it, another worker took a call and said it was someone who was also interested in the dog,” Jennifer Bowman said in an interview. “I started begging my husband for us to find a way to get him. I think they played us for fools.”
The EasyPay loan was processed through Utah-based TAB Bank in what consumer groups and political leaders, including Biden, have referred to as a “rent-a-bank” maneuver, where financing companies process loans through out-of-state banks that don’t have to abide by the state-capped interest rates.
In a statement, TAB Bank defended its practices, saying it is a better option than payday loans and helps “consumers who have no or limited credit.”
Petland, which has 22 company stores and 75 franchises, stopped offering triple-digit loan options in April 2021, said Elizabeth Kunzelman, the chain’s vice president for legislative and public affairs, calling it “the responsible thing to do.”
In the Bowmans’ case, Kunzelman argued they should have been aware of the EasyPay interest rate since they “were given documentation of the terms.”
However, records suggest that at least some other Petland stores have continued to offer loans above this rate even after the store’s policy change.
For example, one video of a Petland employee this summer at a store in Wichita captured a conversation with a Humane Society volunteer posing as a customer in which the person was advised against a triple-digit interest loan that the employee suggested the company was still offering.
“If you don’t pay it off within those 90 days, you have to start paying the interest too, and their APR is, like, insane, like, it’s, somebody got it figured the other day, like, 194 percent,” the employee said in a video reviewed by The Post.
Kunzelman said the Petland franchisee — which independently owns and operates the store — told her that the highest interest rate they were offering at the time the video was shot was through a company credit card at 29.99 percent.
Especially troubling for pet owners like the Bowmans is the anguish they experience when the dog also comes with health problems. With Zeke, veterinary records reveal a host of physical problems that included a “chronic history of allergic skin disease, gastrointestinal disturbances and respiratory issues,” according to a necropsy report performed after he died of renal failure at 20 months of age. The veterinarian also said Zeke’s health problems were “a direct result of his prior genetic and breeding history.”
“We would be homeless if my mother-in-law had not stepped in to help us financially,” Bowman said. “We didn’t want to give up on Zeke. We loved him, and we wanted to save him.”
Kunzelman said the store took seriously the complaints about Zeke’s health and reimbursed the Bowmans for their veterinarian bills and for the price they paid for Zeke, minus financing. The couple say Petland repaid only a portion of the veterinary bills and that the ordeal still cost them thousands of dollars and their credit also suffered.
“The store communicated the medical issues and hardship back to the breeder, who agreed to stop breeding the sire and dam. The store also stopped purchasing from that breeder,” Kunzelman said, adding that she does not believe any other Petland store has since purchased from the breeder.
In many cases, owners ultimately default on their loans. After Zeke died, the Bowmans said they stopped paying on one of the two loans they secured through Petland. They continue to receive monthly calls from a collection agency and, they said, their credit has been seriously damaged.
Millie Hill said once she saw the terms of the loans for her Chihuahua puppy, she secured a lower-interest loan to pay them off, but — due to late fees and other reasons — she said the finance companies told her they would not accept a lump sum. Ultimately, Hill’s daughter, Aimee Budrow, stepped in and encouraged her mother to walk away from the loans, even though creditors continue to seek payment. Budrow also quickly learned that her mother was unable to take care of a puppy, so it was given to a relative.
Budrow said the sales staff at Puppyland should have realized her parents would not be able to care for the dog when they were unable to secure a loan with a reasonable interest rate.
“People who sell puppies should not be selling them to people who have to take out a loan with this kind of interest rate,” Budrow said. “If that’s the only way you can secure a loan, you are probably not in a great position to take care of the dog.”
Kerr, Puppyland’s founder, disputed the idea that her employees should have known the Hills weren’t prepared for the dog or the loan they signed, saying employees are not “in the business of determining people’s finances or any medical conditions.”
Millie Hill said she worries that people with limited income — particularly those who are older — could also end up with a high-interest pet loan, which she describes as “one of the worse experiences of my life.”
“I don’t want them cheating other people,” she said. “Especially elderly people who just want something to love.”
Alice Crites contributed to this report.