Transportation Alliance Bank (TAB Bank) in Ogden, Utah, has a partnership with a fintech called EasyPay Finance that seems to forward the bank’s aim of financial inclusion — it lends to people with low FICO scores who couldn’t get credit elsewhere — but the relationship has drawn criticism from advocates for animal and consumer rights.
Part of EasyPay’s business is making pet loans through stores that get their dogs from abusive puppy mills, where animals are kept in tiny cages, mistreated, malnourished and not given proper medical care, according to animal rights groups. The loans also have interest rates as high as 188.99%, according to the National Consumer Law Center.
TAB Bank initially denied that its work with EasyPay Finance of Carlsbad, California, was directly or indirectly funding puppy mills — and indeed, it may be very difficult for lenders to know of any such connections.
"We have assurances from the retailers that they verify and track the sources of their pets," said Curt Queyrouze, CEO of $1.2 billion-asset TAB Bank, when first contacted by American Banker for this story.
Queyrouze, who has a rescue dog at home, reassessed that statement after the National Consumer Law Center provided evidence of a loan that funded the purchase of a pet bred in a puppy mill. The NCLC and the Humane Society called out EasyPay Finance and TAB Bank in February for making puppy mill loans.
Queyrouze spoke this week with people at the Humane Society about the issue.
“At this point, we are committed to researching further to assess the pet finance vertical and to ensure that we aren’t unknowingly contributing to the support of bad actors,” Queyrouze said. “We are committed to take appropriate action to eliminate this risk to the pets and prospective owners.”
The case underlines the risks banks take on when they partner with fintechs. There’s the chance that the fintech partner will make high-interest payday loans that will
Add to that list the danger of inadvertently making puppy mill loans.
Some states have banned pet stores from selling dogs, knowing most come from puppy mills.
“Of course, none of the puppy-selling pet stores will say they sell puppies from mills,” said John Goodwin, senior director of the Humane Society. “The game the pet stores play is one of semantics, redefining what a puppy mill is so it describes any breeder other than the ones they use.”
The large kennels that supply pet stores tend to view the dogs as production units rather than pets, he said.
“USDA-licensed commercial dog breeding kennels usually have scores, if not hundreds of dogs, and the stores will argue that those facilities somehow do not meet the definition of what a puppy mill is,” Goodwin said. “A USDA-licensed dog breeder can keep a dog in a cage only six inches longer than her body for her entire life. They can, and do, breed the mothers every heat cycle until their bodies wear out, so as to maximize production.”
The Humane Society has investigated pet stores throughout New York, California, Virginia, Georgia, and Illinois and found they all used high-volume breeding operations.
The NCLC shared with American Banker a loan contract for an EasyPay-TAB Bank loan that was made through Hicksville, New York-based pet store chain Shake A Paw. The loan helped facilitate the purchase of a puppy for $3,864.09 with a $1,364.09 down payment and a $2,500 loan with a 151.98% annual percentage rate.
In December, New York Attorney General Letitia James sued Shake A Paw for selling hundreds of sick or injured puppies that often died within days for $2,500 to $8,000 per dog. (In New York, it costs about $400 to adopt a healthy dog from a rescue organization.)
The dogs were sick because they came from large-scale puppy mills including Blue Ribbon Puppies in Indiana, the lawsuit said. For the loan contract shared with American Banker, the Humane Society traced the purchase to Blue Ribbon Puppies.
“Puppies bred in puppy mills are kept in facilities that have little if any regard for the welfare of the animals,” the New York Attorney General’s lawsuit said. “The puppies are subjected to inadequate housing, shelter, staffing, nutrition, socialization, sanitation, exercise, veterinary care and/or inappropriate breeding.”
The owners of Shake A Paw fail to disclose the sources of their puppies, a practice known as “puppy laundering,” it said.
The Attorney General was alerted to Shake A Paw by 99 consumer complaints the office had received about the retail chain since 2016.
“We do our best to ensure that the pet sellers we do business with, and their suppliers, treat their animals humanely,” said Mary Jones, CEO of EasyPay, in a statement. “With financing through EasyPay’s platform, we helped bring love and joy to many pet purchasers and their new puppies last year. We have not received a single complaint about the health or condition of these puppies.”
Goodwin acknowledged that lenders might be unaware of the animal abuse underlying their loans.
“Third-party finance companies are just that, third parties,” he said. “They have no say over where the puppies come from and they are not likely to be the ones an aggrieved customer goes to after their puppy gets sick or dies. The good news is that companies like EasyPay can take a stand against puppy mills by no longer financing pet purchases. Such a decision would have a negligible effect on their revenue, while saving a lot of mother dogs from a lifetime spent in a puppy mill cage.”
Jones did acknowledge EasyPay’s high credit costs.
“But high rates are the only way banks can provide credit to individuals with troubled credit,” Jones said in her statement. “We believe that customers are in the best position to decide whether a financed purchase is in their interest.”
Goodwin would like to see finance companies pull the plug on pet loans.
“The only way for these finance companies to avoid supporting puppy mills is to stop offering loans on pet purchases,” he said.
