Buying a puppy? Finance company illegally overcharging up to 189% interest, consumer groups claim.

If you’re ever offered a loan to buy a puppy, beware.

A coalition of consumer advocate groups claims a finance company, working through pet sellers and other retailers, is offering “predatory loans” that are in violation of New Jersey law and the laws of 31 other states.

“It is illegal in New Jersey for companies that are not banks to make loans with interest over 30%,” said Lauren Saunders, associate director of the National Consumer Law Center.

A report by the group says the loans are facilitated by EasyPay Finance, which is not a bank, but instead uses Transportation Alliance Bank (TAB Bank) of Utah to provide the financing, the groups allege. EasyPay also offers similar products to mechanics, furniture stores and other retailers, the consumer groups said.

“If a court were to find that EasyPay Finance is the true lender, not TAB Bank, then EasyPay would be violating the law when it charges (annual percentage rates, or APRs, of) 130% to 189%,” Saunders said.

EasyPay and its parent company Duvera Billing Services did not respond to requests for comment via telephone, email and social media.

A TAB Bank spokesman referred questions to a page on its website that didn’t specifically address the allegations.

It said TAB Bank has partnered with companies that use the bank’s “financial strength to offer unsecured loans and credit cards to consumers who have no or limited credit,” claiming the products are better for consumers than so-called payday loans.

“TAB Bank provides the funding and our program managers oversee the operations and services of the loans on the bank’s behalf,” it said. “Most of these program managers provide financing for unexpected or big-ticket necessary purchases, such as auto repairs or home furnishings.”

The New Jersey Division of Consumer Affairs said it had one complaint filed against TAB Bank and seven against EasyPay. It didn’t offer any additional comment about the allegations.

The consumer groups say EasyPay uses TAB Bank to “disguise the loans as bank loans that are exempt from state rate caps.”

They said in states that allow these high rates, EasyPay extends financing directly.

Consumers have submitted hundreds of complaints about EasyPay to the Consumer Financial Protection Bureau (CFPB) and the Better Business Bureau, claiming illegal sky-high interest rates, deceptive interest-free promotions, and debt collection and credit reporting abuses.

The financed puppies were sold for as high as $5,000, the consumer groups said.

In one complaint to the CFPB, a New Jersey consumer said they went to a pet store to buy a cocker spaniel. The Salem County resident was offered and accepted financing through EasyPay.

“I found that I am being charged 151.97% which is five times the legal limit of 30% that can be charged in New Jersey,” the complaint said.

Another Salem County resident told CFPB in a complaint that they felt they were being “scammed,” with interest of 129.97% on a loan for the purchase of a dog.

A customer from Cranford said they took an $1,800 loan that was supposed to free of interest and penalties for 90 days.

“I tried to pay the loan and they said that I missed 2 payments so the loan went into default and that I owed almost twice the amount of original loan in fees and interest! Now they have another entity trying to collect the debt and in less than 14 months the debt has been reported to 2 of the credit agencies as over {$5000.00},” the complaint said.

The consumer groups say they want the Federal Deposit Insurance Corporation (FDIC) to stop TAB from working with EasyPay on its high interest rate products.

FDIC said it had no comment on the report.

“TAB Bank is misusing its bank charter by fronting for abusive loans that bleed consumers dry,” said Nadine Chabrier, policy and litigation counsel for the Center for Responsible Lending. “Responsible merchants should stop peddling predatory EasyPay loans and the FDIC should end TAB Bank’s participation in this scheme.”

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Karin Price Mueller may be reached at [email protected]. Follow her on Twitter at @KPMueller.