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Transportation Alliance Bank (TAB Bank) in Ogden, Utah, has a partnership with a fintech called EasyPay Finance that appears to be advancing the bank’s goal of financial inclusion — making loans to people with low FICO scores who can’t get credit elsewhere could – but the relationship has drawn criticism from animal rights and consumer rights advocates.
Part of EasyPay’s business is making pet loans through businesses that source their dogs from abusive puppy mills, where animals are kept in tiny cages, abused, malnourished and not given adequate medical care, according to animal rights groups. The loans also have interest rates of up to 188.99%, according to the National Consumer Law Center.
TAB Bank initially denied that its association with Carlsbad, Calif.-based EasyPay Finance directly or indirectly funds puppy mills — and indeed, such connections can be very difficult for lenders to discover.
“We’ve had reassurances from retailers that they verify and trace the provenance of their pets,” said Curt Queyrouze, CEO of $1.2 billion TAB Bank, when he was first told by American Banker about of this story was contacted.
Queyrouze, who has a rescue dog at home, reevaluated that statement after the National Consumer Law Center presented evidence of a loan that funded the purchase of a pet raised in a puppy mill. The NCLC and the Humane Society called EasyPay Finance and TAB Bank in February for lending to puppy factories.
Queyrouze spoke to people at the Humane Society about the topic this week.
“At this time, we are committed to doing further research to assess the pet finance industry and to ensure we are not unknowingly helping to support bad actors,” Queyrouze said. “We are committed to taking appropriate action to eliminate this risk to the pets and potential owners.”
The case underscores the risks banks take when partnering with fintechs. There is a chance that the fintech partner will provide high-interest payday loans for this Trigger complaints from consumers and regulators. Fintechs could also be overly aggressive in fraud detection mistakenly closing the accounts of innocent customers without customer service to rectify the situation. There is a risk of becoming a fintech disabled by fraud.
Add to that list the dangers of accidentally giving puppy credit.
Some states have banned pet stores from selling dogs, knowing most come from puppy mills.
“Of course, none of the pet stores that sell puppies will say they sell puppies from mills,” said John Goodwin, senior director of the Humane Society. “The game that the pet shops are playing is a semantic game that redefines what a puppy mill is so that it describes every breeder not used by them.”
The large kennels that supply pet stores tend to view the dogs as production units rather than pets, he said.
“USDA-licensed commercial kennel kennels typically have dozens, if not hundreds, of dogs, and stores will argue that these facilities somehow don’t meet the definition of what a puppy mill is,” Goodwin said. “A USDA-licensed dog breeder can keep a dog in a cage just six inches longer than its body for its entire life. They can and do breed the mothers in each heat cycle until their bodies are worn out to maximize production.”
The Humane Society examined pet stores throughout New York, California, Virginia, Georgia, and Illinois and found that they all use high-volume breeding operations.
The NCLC notified American Banker of a loan agreement for an EasyPay-TAB Bank loan made through Hicksville, New York-based pet store chain Shake A Paw. The loan helped facilitate the purchase of a $3,864.09 puppy with a $1,364.09 down payment and a $2,500 loan with an APR of 151.98%.
In December, New York Attorney General Letitia James sued Shake A Paw for selling hundreds of sick or injured puppies, which 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 ill because they came from large puppy mills, including Blue Ribbon Puppies in Indiana, the lawsuit said. For the loan agreement shared with American Banker, the Humane Society attributed the purchase to Blue Ribbon Puppies.
“Puppies bred in puppy mills are raised in facilities that have little or no regard for the welfare of the animals,” the New York Attorney General’s lawsuit states. “The puppies are exposed to inadequate housing, shelter, staffing, nutrition, socialization, hygiene, exercise, veterinary care and/or inappropriate breeding.”
Shake A Paw owners fail to disclose the origins of their puppies, a practice known as “puppy washing,” it said.
The Attorney General was drawn 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 retailers we do business with and their suppliers treat their animals humanely,” EasyPay CEO Mary Jones said in a statement. “Last year we helped bring love and joy to many pet buyers and their new puppies by financing through the EasyPay platform. We have not received a single complaint about the health or condition of these puppies.”
Goodwin acknowledged that lenders may not be aware of the animal abuse underlying their loans.
“Third-party financial companies are exactly that, third parties,” he said. “They have no say in where the puppies come from and they are probably not the ones that an aggrieved customer goes to after their pup becomes ill or dies. The good news is that companies like EasyPay can take a stand against puppy factories by no longer funding pet purchases. Such a decision would have a negligible impact on their earnings while at the same time saving many mother dogs from life in a puppy mill cage.”
Jones has acknowledged EasyPay’s high borrowing costs.
“But high interest rates are the only way banks can lend to people with credit problems,” Jones said in her statement. “We believe that customers are in the best position to decide whether a financed purchase is in their best interest.”
Goodwin wants financial firms to pull the plug on pet loans.
“The only way for these financial firms to avoid supporting puppy mills is to stop offering pet purchase loans,” he said.