CURRENT TOPICS IN LEGISLATION: Consumer Protection Pet Leases and Finance Legislation Must Preserve Fancier Breeding Lease Practices
THE PROBLEM: Along with the commercialization and monetization of “all things pet” that entrepreneurs can think of, something called “pet leasing” began turning up in consumer protection news reports. Buyers with insufficient credit or means to pay exorbitant prices for commercially sold pets were lured into unbelievably inappropriate leases or installment sales contracts. The lessees or buyers did not have title to the pet, and repossession is a contractual term, whether or not it is enforced. At the end of the lease, by definition a fixed term, or final payment of the installment contract, title to the pet would be transferred – if the pet were even still alive. We agree that these are predatory financing techniques and invite well drafted protective laws enacted to protect the public and pets, but these must also protect the historic use of breeding leases by cat and dog registries or any other well-accepted practices that could be unintentionally be included in drafting.
LEGISLATIVE HISTORY: The first pet lease bill appeared in California in 2017 as AB 1491. As introduced, it would have unwittingly included the breeding leases. With its extensive legislative staffing, California committees have consultants assigned to analyze each bill consistent with the authority and policies of the respective committees. Fortunately, the Assembly Judiciary consultant was an attorney who quickly saw the solution that would be consistent with the committee’s policy to narrowly draft prohibitions and avoid exemptions not directly related to the Civil Code. The bill was amended then, and with only one subsequent amendment clarifying one word, covering both consumer leases and secured installment contracts, enacted as California Civil Code Section 1670.10:
“1670.10. (a) (1) Except as provided in paragraph (2), a contract entered into on or after January 1, 2018, to transfer ownership of a dog or cat in which ownership is contingent upon the making of payments over a period of time subsequent to the transfer of possession of the dog or cat is void as against public policy.
(2) Paragraph (1) shall not apply to payments to repay an unsecured loan for the purchase of the dog or cat.
(b) A contract entered into on or after January 1, 2018, for the lease of a dog or cat that provides for or offers the option of transferring ownership of the dog or cat at the end of the lease term is void as against public policy.
(c) In addition to any other remedies provided by law, the consumer taking possession of a dog or cat transferred under a contract described in paragraph (1) of subdivision (a) or in subdivision (b) shall be deemed the owner of the dog or cat and shall also be entitled to the return of all amounts the consumer paid under the contract.
(Added by Stats. 2017, Ch. 761, Sec. 1. (AB 1491) Effective January 1, 2018.)”
No unrelated express exemptions were required in order to outlaw these predatory consumer financing schemes without including established fancier practices.
A similar successful approach was used in Nevada also in 2017 that amended the Nevada Revised Statutes, Chapter 597 – Miscellaneous Trade Regulations and Prohibited Acts by enacting Assembly Amendment No. 727 to Senate Bill No. 185 First Reprint. Like California, this Nevada statute is tailored to consumer protection and did not require exemptions for other animal concerns, although the California provision is far clearer in its intent and consequences:
“NRS 597.997 Prohibition on certain offers to lease living animal or goods intended for personal, family or household use; federal Truth in Lending Act applicable to retail installment contract for sale of living animal or goods intended for personal, family or household use; failure to comply constitutes deceptive trade practice; violation constitutes consumer fraud.
1. A person shall not offer to lease any living animal or goods intended for personal, family or household use, including, without limitation, pets, tires, batteries and hearing aids, if the living animal or good is expected to have not more than a de minimis residual financial value at the end of the term of the lease or contract.
2. Any retail installment contract for the sale of any living animal or goods intended for personal, family or household use, including, without limitation, pets, tires, batteries and hearing aids, is subject to the provisions of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and any regulations adopted pursuant thereto.
3. The failure of a person to comply with this section constitutes a deceptive trade practice for the purposes of NRS 598.0903 to 598.0999, inclusive.
4. A violation of this section constitutes consumer fraud for the purposes of NRS 41.600.
5. The provisions of this section do not apply to any lease or contract on furniture or household electronics.
6. As used in this section:
(a) “Goods” has the meaning ascribed to it in NRS 104.2105.
(b) “Household electronics” means electronic devices, personal effects and property of an electronic nature used or to be used in a dwelling.
(c) “Residual financial value” means the amount the living animal or good is worth at the end of the term of the lease or contract and includes, without limitation, the salvage value of the living animal or good.
(d) “Retail installment contract” has the meaning ascribed to it in NRS 97.105.
(e) “Salvage value” means the amount expected to be obtained when the living animal or good is disposed of at the end of its useful life.
(Added to NRS by 2017, 1735)”
Later bills introduced in other states have not, as of January 2019, been enacted. Some efforts have been drafted narrowly like California and Nevada to avoid need for exemptions, but others have expressly exempted dog breeding leases but omitted cats. If bill language requires express exemption of breeding leases, this must be inclusive of dogs and cats.
POINTS TO REMEMBER:
“Pet leases” are a “rent to own” finance mechanism that induces a consumer to make lease payments for a pet far exceeding its value, lessor retaining right to repossession until all lease payments made at which time title would be transferred to the lessee. These as well as installment contracts secured by the pet being purchased are now considered predatory consumer finance methods and the subject of statutory prohibition with high penalties and/or declared void.
In contrast and NOT included are breeding leases. These are historic, practical contracts between registrants of cats or dogs for specific periods and purposes other than purchase of the animal. These are described and authorized by the registries’ rules and usually recorded with the registries using their respective forms. These include The Cat Fanciers’ Association (CFA,) The International Cat Fanciers’ Association (TICA) and the American Cat Fanciers’ Association (ACFA) for cats and The American Kennel Club (AKC) for dogs, and possibly others. For additional CFA information, contact us at legislation@cfa.org and/or check with other registries for their particulars.