An Iowa couple who inadvertently bought a seriously ill dog with a loan at an 189% interest rate wants lawmakers to protect consumers from a similar experience.
Jeff and Jennifer Bowman, their story was the first Reported by The Washington PostHe bought a 12-week-old English Bulldog at Petland in Iowa City three years ago.
The price for the pup, which they later named Zeke, was $4,400. “They told us the price and I almost fell to the floor,” Jennifer Bowman recalls. The couple didn’t plan on spending that much money on a new dog, but with Zeke, she said, “it was love at first sight.”
“They put us in a little room where we could sit with Zeke and he could run, and we just fell in love with him,” Jeff Bowman said.
With taxes added, a $300 “Homecoming Supplies Kit” and an Iowa Hawkeyes dog collar, Bowmans owes Petland a total of $5,001.07. The couple paid $500 and, with the help of Petland staff, signed papers that financed the rest of the purchase through two separate loans—one for $1,500 and the other for $3,000.
A Petland writer warned the couple about the interest rate they would face if they didn’t pay off their $1,500 loan within 90 days.
“They actually said, ‘Try to pay that amount back because after a certain point the interest rate will go up dramatically,'” Jeff Bowman recalls. “But we didn’t know how much it would go up.”
“Bank rent” loans avoid state-imposed interest caps
Although interest rates in Iowa are set at 36%, Al Bowman later discovers that a $1,500 12-month loan, offered through a company called EasyPay, states that if they don’t pay back the loan within 90 days, the interest rate is 188.98. % will be applied to the loan.
The loan documents, which include a truth-telling statement in federally enforced lending law, clearly state the exact terms of the deal — implying that Bowmans would have to pay $1,827 in financing fees to borrow $1,500, for a total refund of $3,327. EasyPay will automatically withdraw $128 from the couple’s bank account every two weeks.
But that disclosure statement was one of the many documents Bowmans was shown that day, and the couple were more focused on your costume than on the terms of the loan. Plus, they didn’t know Zeke had serious health issues that would lead to multiple and costly trips to the vet which could affect their ability to repay the loan.
The higher interest rate is made possible by EasyPay processing the loan through the Transportation Alliance Bank, based in Utah. It’s a process that animal welfare advocates and consumers call “bank rent,” and it enables finance companies like EasyPay to route loans through out-of-state federally regulated banks that don’t have to comply with state-set interest rate caps.
The National Center for Consumer Law He says these “predatory” practices have led to hundreds of complaints.
- A New Jersey consumer bought a spaniel and was charged 152% interest, which is five times the legal limit of 30% in New Jersey.
- A consumer in Georgia complained that the pet store did not tell her that the EasyPay financing fee was an interest rate of 180%. “The Grammy was supposed to cost $2,500 (and) it now costs nearly $7,000.”
- A Florida consumer said he had damaged credit after buying a puppy who immediately fell ill and eventually died. “I only borrowed $2,200….the consumer complained…I owe $5,500 on my credit report, because of the interest.
- Another Florida consumer bought a Shih Tzu puppy who died after the family incurred veterinary bills of $1,280. After the pup died, the debt collector kept calling to collect the loan.
Last year, Congress adopted a resolution to repeal a Trump-era rule enacted by the Office of the Comptroller of the Currency that facilitated such loans.
“In many states, these lenders are kept in check by caps on the amount of interest they can collect,” President Joe Biden said while signing the resolution. “But some loan holders and online lenders have figured out how to get around those limits…by using a partnership with a bank to avoid the state cap and charging outrageous interest—some of them as high as 100 percent in interest, which is astounding….the last administration I let it happen, but we won’t.”
The Office of the Comptroller’s abolition of the currency rule has not halted the bank’s leasing process — and advocates say additional action is needed by the FDIC and Congress.
A coalition of consumer groups, including Public Citizen, the Public Interest Research Group and the American Consumer Federation, have petitioned the FDIC, which regulates banks. The groups are urging the agency to halt the practice of banks that act as “fronts” for businesses they view as predatory lenders.
Earlier this year, they wrote to the FDIC stating that “FDIC-supervised banks help predatory lenders make loans of up to 225% APR that are illegal in almost every state. … FDIC bank lease schemes have flourished in the The past few years, and it’s time for that to end.”
Your costume is dying, the collection calls continue
Al Bowman says the financial impact of Zick’s loans has been significant. “We almost lost our house,” Jennifer Bowman said.
When the couple realized the interest rate they would face if they did not rush to pay off the EasyPay loan, they sought help from Jeff’s mother, who paid off the balance using a credit card with a much lower interest rate.
Although difficult, it paled in comparison to the emotional and financial issues that Zeke’s health problems posed to the couple.
“Just two days after we brought him home he started bleeding from his ass,” Jennifer Bowman said. A series of diagnostic tests will eventually show that Zeke suffered from giardiasis, an intestinal infection caused by a microscopic parasite. Additional testing by a specialist showed Zeke to have an abnormal kidney and likely not even 5 years old.
“It was horrible,” Jennifer Bowman said. “I was taking him to puppy training classes, but he couldn’t play for long because he was going to be exhausted. It was hard to watch because he was so full of life and wanted to play. He was the best dog – just so happy.”
In February 2021, Zeke died of kidney failure at the age of 20 months, with veterinary records describing a number of physical issues that included a history of allergic skin conditions, gastrointestinal disorders, and respiratory problems. A vet later stated that Zeke’s death was a direct result of his “previous genetic and reproductive history.”
History of violations
American Kennel Association records indicate that Zeke was born in Twin Birch Kennels, a breeding operation run by Laverne and Marietta Nolte of Charles City. The dog house has A history of regulatory issues, according to USDA records.
The most recent USDA inspection in June pointed to several violations, including not providing adequate veterinary care to four English Bulldogs whose hind legs were poor, and failing to keep proper veterinary identification and records.
In February, a USDA inspector noted similar problems, reporting that several dogs in the Twin Birch were not receiving adequate care, including a bulldog with a “large red growth” covering a third of his right eye. “The dog has not been evaluated by a vet,” the inspector said, and the kennel had no plans to diagnose or treat the condition.
Petland officials paid Bowmans the full amount of the Zeke’s purchase price, minus the financing charges, and some of the couple’s vet bills. After Zeke’s death, the Bowmans stopped paying the second of the two loans they took out through Petland. To this day, Jennifer Bowman said they are still getting calls from a collection agency, and their credit rating has been hit.
Legislation stopped in Congress
In 2019 and 2021, a bill was introduced to Congress to provide a permanent national solution to the “bank lease” issue by capping the interest rate at 36% applicable to all lenders. But this proposal has faced stiff opposition from the finance industry and has not yet been approved by Congress.
With federal action on hold, some states have taken action. Illinois has banned high-interest loans, and California now bans online pet stores – regardless of their physical location – from helping with the funded purchase of dogs, cats or rabbits.
For EasyPay, the company acknowledges its interest rates can be as high as 199%, but says it’s making financing an option for people who wouldn’t otherwise qualify for a loan.
“The traditional banking and credit system has left many Americans behind,” the company told the Washington Post. “EasyPay facilitates financing options to ensure that these consumers have a reliable and secure option to access credit that would not otherwise be available for urgent needs and discretionary purposes.”
Petland officials could not be reached for comment For The Washington Post That in April 2021, the company ceased offering loan options at triple-digit interest rates.
As for the Bowman family, they now have a new dog — one that was acquired from a friend, not a dealer — but they still want others to know about your costume and the financial and veterinary risks associated with puppy mills and pet financing.
“We called the Better Business Bureau, the USDA, the attorney general’s office — just a lot of people,” Jennifer Bowman said. “We were trying to get Zeke’s story out so that another family wouldn’t go through what we went through.”
This article first appeared in Iowa Capital Dispatcha sister site of the Nebraska Examiner in the State Newsroom Network.
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