Is pet leasing more bark or bite?

More and more pet stores offering opportunities to lease pets, not buy them

By Amy Davis - Reporter/Consumer Expert, Keith Dunlap

HOUSTON - Most people understand what it means to lease a car. You make monthly payments in exchange for driving it, but you don't actually own it. At the end of the lease, unless you make a big balloon payment, you have to give the car back.

Now imagine finding out you are leasing your dog. Houston area pet stores are signing up customers for what some say are troubling contracts.

Moose is a baby English bulldog. He is 2-year-old Beckham McNeal's constant companion.
Angela Marcano named her new English bulldog Roy. Both families say they were shocked to learn their precious new puppies are not actually theirs.

"I was blown away," said Kia McNeal, Beckham's mom. "I didn't know that you could lease an animal."

Channel 2 Investigates discovered pet leasing is a growing trend. It is completely unregulated in most states.

We sent a Channel 2 intern puppy shopping with a hidden camera to see how it works. Inside a southwest Houston pet store that advertises pet financing, a store employee told her that she could likely get approved for a $1,500 loan to pay for a Pomeranian pup.

"They only require you to have a valid driver's license, a valid email, an active checking account and that you make $1,000 a month," the store employee said.

Pet store employees offer the financing or lease options, but the lenders are third-party companies.

Customers never see or speak with an actual representative.

The application and approval process is all done on your smartphone.

McNeal said an employee at Pets R Us in Huffman took her phone to supposedly guide her through the process.

"She gives me my phone and goes "Oh! Sign here and here and here!" McNeal recounted. 

Marcano described the same scenario when she was at Pets R Us about four months earlier.

"She was like 'Oh, you know let me see it.' She'd bring it up and she'd bring it straight to the section for me to sign... and I would sign it. And she'd be like 'Here, let me help you with the next section.' Then she would just scroll down to the next section, bring it up again for me to sign on my phone," said Marcano. 

Both Marcano and McNeal claim the final terms of the deal were not revealed in store. The actual contracts were emailed to them directly from the lender. When both customers opened the emails the following day, they found contracts with more wrinkles than their new puppies.

"They definitely misled us," said Jed, Kia's husband.

Kia claims she thought she was paying $3,000 for Moose in a payment plan, but the lease contract with Wags Lending shows she will pay $299.99 a month for 24 months totaling nearly $7,199.76. She then has the option to purchase Moose by paying an additional $450, bringing the total price of the dog to $7,649.76.

The owner of Pets R Us wouldn't talk with us on camera, but she gave us documents that both customers signed in person acknowledging that they were entering into a lease agreement.

"I think it may just be the excitement that bowls them over so they're not reading things," said animal law attorney Fran Ortiz, who likens the practice to predatory lending. "They're actually having them sign before they read the contract, which is terrible. And putting them on a cellphone? I have very old eyes. I can not see what is on my cellphone. That is just a really unfair practice."

Last year, lawmakers in California and Nevada made pet leasing illegal. New York is about to follow suit, but the Texas Attorney General's Office told Channel 2 it had never heard of the practice.

Now the McNeals are stuck.

The lease prohibits them from selling or giving Moose away. Even if he gets sick or dies, they are still obligated to pay in full.  If they miss a payment, the lease company can "retake the pet" and charge McNeal for storing and maintaining it.

"You cannot just, you cannot do this to people," Marcano said. "You're playing with people's feelings."

As if it wasn't bad enough for the customers to learn they were leasing their puppies; we learned the pet store locked them into two loans for one animal. 

My Pet Funding wouldn't approve the Marcano for a lease to cover the full cost of Roy, so Pets R Us signed her up for a traditional loan from Easy Pay Finance to cover the remaining $600. The Easy Pay loan comes with a 130% interest rate. 

At the end of two years, she would have paid $1774.08. The total lease payments at the end of two years would be $7425.43. Combined, Roy would cost Marcano $9199.51. 

"This is unusual. This is different from pretty much anything that I've ever seen," said consumer attorney Robert Johnson.  

Johnson says new pet parents who don't pay the full amount could lose more than just their dog.   

"You're gonna take a hit on your credit and end up getting sued for the remainder of the debt," he explained.  

Pets R Us signed McNeal up for a second Easy Pay loan for $1,732 on top of her $7,649.76 lease.

McNeal says, on paper, store employees claimed the loan was for pet supplies, but she never received any. She said it was to cover the remaining portion of her dog that her lease wouldn't cover. 

"They basically lie to the other financing company and say 'Oh, it's for the supplies' when it's actually for his cost split into two," McNeal said. 

The attorney for Pets R Us told Channel 2 that the store does sometimes split the cost of dogs between two financing companies. She said some companies allow it. It turns out that Marcano's double financing contracts were not allowed by "My Pet Funding.” That is why her contracts were canceled when she complained.

When Marcano told leasing company "My Pet Funding" (hyperlink to: she was contacting the media, the pet leasing company canceled her contract and allowed her to take Roy back to Pets R Us.

Pets R Us answered our questions in writing through its attorney Misty Cone.
Statement from Pets-R-Us:

"Our goal at Pets R Us is to match puppies with loving homes. Unfortunately, not all prospective owners can afford to purchase a pet outright. As a result, Pets R Us offers a variety of finance and lease options to ensure that our customers can go home with their chosen pet. It has sadly come to our attention that two of our customers have expressed complaints regarding the agreements they entered into with Pets R Us. Both of these customers signed legally binding contracts which are attached to this statement. The customers were provided detailed information regarding available finance and lease options. Pets R Us employees tailor the options presented to each customer based on the customer’s own feedback regarding their credit score. Lease purchase options like “My Pet Funding” are presented to customers with lower credit scores in order to allow those customers to take home a puppy that they otherwise would not be able to afford. A standard lease agreement allows the customer to own the puppy upon payment of all amounts due under the terms of the lease. Pets R Us provides finance and lease options in an effort to serve our customers and provide the best puppy-buying experience possible, regardless of credit score. While we regret that two of our customers are unhappy with their lease agreements, we stand behind the contracts entered into between these customers and Pets R Us."
Q: How do Pets R Us present the financing options to customers? In the store, there are plenty of signs that speak to lending a financing, but I didn’t see anything that says “lease.” We also secret shopped the store one day last week, and when employees told our person about financing options, she didn’t describe any of them as leases.
A:  Customers can always purchase a pet outright-without resorting to financing.  For those that require financing to purchase their pets, we provide various options. Brochures made available to customers detail the fact that lease purchase options are available as are cash purchases, and financing through traditional loans. In addition, documentation, including the contracts customers sign, also make clear when a customer enters into a lease agreement versus traditional financing. Pets R Us employees directly question the customer about their credit score. For those with higher credit scores, traditional finance options are available and provided. When a customer indicates to a Pets R Us employee that they have a lower credit score, the employee presents the customer with the option to use a lease purchase program like “My Pet Funding.” Pets R Us currently uses “My Pet Funding” for all lease purchase financing. However, “Wags Lending” was also used in the past. If the customer chooses to proceed with the transaction, the customer then signs detailed agreements both electronically and in print form that clearly indicate the customer is signing a Lease Agreement. Customers selecting a lease purchase option sign and date contracts directly acknowledging receipt of a copy of the Lease Agreement. The contract also includes the statement saying “I am aware that it is a lease and not a loan.” The terms of the transaction are clearly stated on all forms signed by the customer.

Q: The second loan to cover the remaining cost of the pet that the first loan wouldn’t cover also seems, at best, problematic. Store employees told me when one loan won’t cover the entire cost of a dog, they will roll in the remaining cost and some supplies and then apply for a second loan.

A: First, we disagree with any characterization that the financing options made available to our customers are fraudulent. Brochures are available that detail the financing options and we walk our customers through their contracts when they sign. Second, the store employees’ statements concerning financing are mistaken. Pet Funding, one of the resources we use to finance our customers’ purchases, prohibits lending money for “part of a dog.”  That is the policy for pet funding, not our business.  However, finance and lease options are made available as a service to our customers. When a customer applying for financing does not receive financing for the full cost of the puppy, Pets R Us frequently discounts the cost of the pet in order to accommodate the customer and allow them to take home the puppy of their choice. Pets R Us also offers finance options to customers to assist in purchasing necessary supplies for new pets, including loans offered by Easy Pay Finance. Pets R Us complies with the requirements of the individual financial companies whose services are offered. Certain companies allow Pets R Us to “roll over” the remaining cost of the pet into a loan that also includes funds for pet supplies. When allowed by the financial company, this is done only as a benefit to our customers who want to purchase a puppy when one form of financing will not cover the full cost. The customer ultimately signs all contracts which clearly detail the terms of the transactions.

Channel 2 contacted all of the pet leasing companies in this story. All but Wags Lending responded.

My Pet Funding Response

"Anjanette Marcano acquired a pet through a lease purchase agreement on 1/4/18 with Pet-R-Us in Houston, TX. Our closed end consumer lease program employs a risk-based pricing model. Each consumer is unique and the financing fees associated with each consumer’s lease are in turn, unique. As this contract is a lease and not a loan, there is not an associated APR. Our program is compliant with all state and local laws and reviewed on a regular basis by our legal counsel. During the signing process, all required disclosures are provided to the consumer as well as the store supplies the consumer with a printed copy of the lease agreement to review prior to signing. The consumer is in control of the signing process throughout the transaction and all fees are disclosed clearly prior to signing electronically. A final signed copy is sent to the same consumer email address where they initially applied, received their approval, and reviewed their terms.  In this case, the consumer used two forms of financing to purchase a pet.  We reminded the retailer that our program cannot be associated with any additional financing products and promptly canceled the lease. The retailer was required to accept the return from the consumer. Our goal is that each and every pet finds a forever home. Unlike a loans or credit cards where the finance companies have no obligation to the pet after it is sold, a closed end consumer lease is an ongoing relationship with the consumer and the pet. In the unfortunate event that the consumer cannot keep the pet, we then work with our network of stores to adopt the pet and find a permanent home. We are all pet lovers and do not have a desire to remove a pet from a home due to a delinquency when we can always work with the consumer to find a solution."

Statement from Mary Jones, President of EasyPay Finance

"EasyPay Finance takes these types of matters very seriously, and we will conduct an internal review of the claims being made. Due to privacy laws we are unable to provide, or disclose customer information to you, but we are more than happy to outline our application process for the customers who choose to finance with EasyPay. We are very proud of our long history and reputation of being fully transparent with our customers during the application process, and have helped provide straight-forward financing options to hundreds of thousands of customers across the United States. Our high standards in the market place can be validated through our A+ BBB rating and online Google reviews. We have a system in place that has been approved and vetted by the nation’s leading regulatory consumer finance law firm.  This process includes multiple text messages to the consumer during the application process providing full disclosure of all the terms of their contract prior to moving forward with their contract.  As well as to ensure that the consumer, and only the consumer has knowledge of their financing terms, the applicant must correctly answer dynamically generated knowledge-based authentication security questions prior to digitally signing their contract.  These processes are in place to ensure transparency of the consumer’s financing terms and to mitigate and prevent fraud. It is important to note that Easy Pay Finance is not a lease-to-own program, and we deem the leasing of animals as an inappropriate business practice.  We are very focused on maintaining high customer satisfaction, and we have a defined dispute process in place. We encourage consumers to use this dispute process, so that we can try to resolve their complaints or concerns."

Tomorrow morning on KPRC Channel 2 News Today, Davis explains why both Marcano and McNeal had second loans taken out for the same dogs. The story airs at 5:45 a.m.

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