How you could lose your dog -- and your credit reputation -- in this pet leasing scam: Internet Scambusters #806
Animal lovers who can't afford to buy a pet they've fallen in love with are being tricked into signing a pet leasing agreement.
They unknowingly end up paying a fortune to effectively only rent the animal, unless they pay a big lump sum at the end of the deal.
And if things go wrong, they can end up without their beloved pet and with a wrecked credit record, as we explain in this week's issue.
And now for the main feature...
Dog Lovers Fall Victim to Pet Leasing Scam
Imagine buying that darling pedigree puppy you and your family have always wanted, only to discover you don't own it all -- you're a victim of a pet leasing scam.
It's an easy trap to fall into. And it's not always illegal -- because some pet stores do legitimately offer financing plans under which you don't own the animal until you've made all the payments.
But there are lots of pet sellers who don't explain how the program works. They string along customers, signing them up for high-interest lease deals, never telling the buyers they don't actually own their new pet.
Then, when all the payments have been made -- often costing about twice the original price tag or more for the dog -- the buyers discover they have to make another large payment to actually take ownership.
That's just the basic problem. It gets worse.
If you miss a payment, the lease deal often entitles the seller to repossess the animal. Or, if by some misfortune, your pet dies or is stolen, you're still responsible to make all the payments in the deal, which, of course, you signed.
And, although the main subjects of this pet leasing scam are dogs, they've been found to include several others, including parrots and other costly exotic species.
Is It a Loan or a Lease?
The nub of the problem is that people buying animals with a high price tag they just can't afford turn to specialist pet "lending" companies in the belief they're effectively taking out a loan.
But in many cases, they're taking out a lease. And that works the same way as if you lease a car -- you make monthly payments and at the end of a specified period you either have to return the car or pay a lump sum to take ownership.
Leases are also not subject to the same interest rate rules as loans. It often turns out that scam victims, who've signed up for more dog than they can actually afford, are paying absurdly high interest rates.
According to blogger Colin Lalley at digital insurance brokerage website PolicyGenius.com, these rates run as high a 170% per year. In one case, victims ended up paying $5,800 for a $2,400 dog.
No wonder they sometimes miss a payment. Perhaps they've financially stretched themselves and suddenly had to pay a big veterinary bill when their pet falls sick.
Then they suffer the damage to their credit record that results from it.
A recent report in the Washington Post notes that the American Society for the Prevention of Cruelty to Animals (ASPCA) describes pet leasing as "a predatory practice for pushing expensive puppies on people who cannot afford them and do not always understand they are essentially renting an animal for months -- and paying far more than they might have realized."
The paper quotes ASPCA campaign director Jennie Lintz saying that pet store employees or breeders may often gloss over the terms of the lease, sometimes because they don't understand it themselves or because they want to make a sale.
The come-on is often an offer to take home the pooch you've fallen in love with then and there for as little as $50.
The ASPCA is campaigning for pet leasing to be banned and, according to the Post, California and Nevada have now introduced laws to do this.
Now, the U.S. Federal Trade Commission has stepped into the debate, warning of the importance of knowing what exactly you're signing up for when you finance your pet "purchase."
Says the commission's consumer education specialist Lisa Lake: "If a retailer doesn't make the terms of an agreement clear to you or misrepresents the terms of the agreement, they could be breaking the law -- especially if the retailer runs ads leading you to believe one thing but sells you another."
She advises checking the FTC's own explanations of how different buying plans work.
Five Key Actions
If you're planning to buy a pet you can't really afford, or if you find yourself falling in love with one you didn't plan to buy, here are five important things you can do to avoid the painful consequences of a pet leasing scam.
- Set a budget for your purchase and stick to it.
- If you can't afford the animal, think twice about what you could be getting yourself into.
- If you decide to finance, talk to your bank about a loan before accepting a store finance program.
- If you do go in for a store or breeder financing deal, read the terms carefully including the small print, ensuring you know the full cost.
- Consider buying pet insurance, so you don't face a huge bill that could affect your ability to make payments.
Alert of the Week
Many people have a secret or two they'd rather not talk about, so what do you do when a snail mail letter arrives warning, "I know about your secret" and demanding a payment to keep quiet.
In a nutshell, that's a scam currently sweeping the U.S., preying on people's fears.
Of course, the crooks, who don't know anything about you at all, want to be paid by the untraceable Bitcoin currency.
You can almost certainly trash this letter if you get one. If by any chance you believe the threat is real, then it's blackmail and you should speak to the police.
Either way, if you pay, you'll pretty quickly get another demand, and then another, from these devious crooks.
Time to close today, but we'll be back next week with another issue. See you then!