When you hear the words — predatory lending — home mortgages may come to mind. But it can happen with any purchase you finance, including pets.
We looked into what happened to a 23-year-old college student from Naples, and how his experience may be able to help protect you.
For Andrew Williams and Dalmatian Stella, it was love at first sight.
“She just screams unconditional love,” Williams said.
Williams bought Stella in November of 2020 from Lil Rascals Puppies in Gulf Coast Town Center. The sticker price — about $3,200. He couldn’t afford it up front, so he chose on-the-spot financing offered at the pet store.
“I was told it would be $99 a week,” Williams said. “And I figured I’d pay it off in about eight or nine months.”
Nine months later, Williams went online to check the remaining balance and discovered he still owed thousands more.
That’s because the contract he signed with American First Finance has a 153.36% annual percentage rate.
The dog would cost him more than $10,000 if he kept making $99 weekly payments.
We asked Williams if he understood this.
“I did not see that,” he said. “I saw the payments and the amounts and everything like that, and I thought that was a good amount, and I didn’t see the top at all, the amount of interest I would accumulate for a year or even a less than a year. That blows me away still when I had seen that.”
Williams asked his mom for advice.
“When I looked at it, I was just in shock,” Donna Williams explained.
Donna reached out to the owner of Lil Rascal Puppies to see if there was a way they could renegotiate or restructure the deal, to no avail.
“He’s not trying to get out of paying it because he did sign it,” Donna said. “I just don’t like the way it was presented to him. I think it wasn’t fair.”
WINK News went to the store to talk to the owner. Melea Pruskauer says she’s upset her business is getting blamed for the loan provided by American First Finance.
“They’re just a third party to us,” Pruskauer said. “So we don’t know a whole lot of detail about them. They’re our third party.”
Pruskauer didn’t personally handle Williams’ puppy purchase, but claims the terms of the loan are included in the documents customers sign off on when they apply for the credit.
We asked if there was any way that Williams would have not seen those numbers on the contract.
“When they’re signing on the computer, it shows that on there when they’re signing it,” Pruskauer said. “They read everything. Why didn’t you read it? … Does anyone sign a contract before they read it?”
“I never saw the 150% interest rate,” Williams said.
Williams also says he didn’t leave the store with a copy of the paperwork. WINK News cannot independently verify what information Williams saw the day he bought Stella.
Pruskauer acknowledges the 153% interest was high, but doesn’t think these loans are predatory.
“If they can’t afford it, don’t take the dog,” Pruskauer said.
Nicole Waid, a former federal prosecutor who is not connected to this case, says this is an example of predatory lending.
“You’re going into a situation where you’re taking advantage, frankly, of people, and you’re charging astronomical interest rates that aren’t the normal interest rates.” Waid said.
Waid also says it’s legal in the state.
“Florida does actually have laws about the amount of interest that can be charged on any type of purchase,” Waid said. “And they’ve got regulations, and they have all of these things. But this pet store is using a third party, and it appears the loophole in the law is that the third party is allowed to charge these astronomical rates, ethically or unethically.”
WINK News discovered Illinois is cracking down on the financing of pets. It’s called the Holmes Law. It ends contract loans for the purchase of cats or dogs and takes effect on Jan. 1 of 2022. Waid says that needs to happen here.
“Illinois is like, ‘Listen, we are sick of our consumers being taken advantage of, and we’re going to do something about it,” Waid explained. “If we are going to actually protect our consumers, what are the predatory scenarios that are going on with this pandemic, and frankly, buying pets is one of them.”
Bryan Oglesby with Better Business Bureau of West Florida sees a lot of complaints about possible predatory lending and says it’s important to explore all your options.
“Did he compare those rates were their other loan offers?” Oglesby said. “Could he have reached out to his local bank? Could he have used a credit card and to compare those offers and make the decision of what’s the best offer to finance the pet in this case?”
All questions Williams didn’t think to ask.
“When they were explaining it to me as a 22-year-old with the dog, puppy in my lap that I was in love with, you don’t really think of these things,” Williams said.
We spoke with the general counsel for American First Finance. She defends its practice, saying it’s not predatory lending because the terms of the agreement are spelled out in the contract, and the customer doesn’t have to take the deal.
The Company also offers early payout, which would lower the ultimate cost.
The attorney says the company is a vendor that offers a technological platform for an out-of-state bank which sets the interest rate.
Williams paid off the remaining balance, but did file a complaint with BBB against the store.
Here’s are resources that can help: