When the legendary Patti Page sang, “How much is that doggie in the window?” she couldn’t have guessed that six decades later, the answer might depend on whether a consumer buys or leases a pet.
Today, when purebred and designer pets can fetch prices in the thousands of dollars, many pet stores and breeders offer customers the option of taking home – right away – the pets that tug at their heartstrings, even if the price is more than they can afford. These sellers may tell customers they only need to make a relatively small up-front payment and sign an agreement to make monthly payments. In exchange, they can take home the fluff ball of their dreams.
But what are the customers getting? Many are actually leasing their new pets instead of financing a purchase. If they don’t understand their agreement – particularly that their payments are lease payments and not payments toward a purchase – the customers can be headed for heartache and the retailers can find themselves afoul of the law.
Pet leasing is a relatively new industry. It relies on a financial product – a consumer lease – that is commonly associated with cars, furniture, and heavy equipment, not with puppies, parrots, and other pets. As a result, most people considering buying a pet are not expecting to be handed a lease and many pet sellers may not be prepared to explain a lease’s terms.
What are the terms? Some financial services companies have partnered with pet sellers to offer leases. Their lease terms vary. In general, pet leases run for a set time, typically one to three years. During the lease period, customers must make set monthly payments, just as they would if leasing a car. The payments will total more than the list price of the pet, sometimes much more. When the lease is over, the customer doesn’t own the family pet, not even a whisker. To purchase their pet, customers usually have to pay an additional amount, possibly hundreds of dollars. If they can’t buy the pet, they must surrender it. Lassie doesn’t get to stay home.
There can be complications. If the customer misses a monthly payment, the leasing company can repossess Fluffy, Fido, or Cookie the Cockatoo. And, if the animal gets lost, stolen, or dies, or if the customer can no longer keep the pet, the customer can still be required to make payments through the end of the lease period or pay a hefty early termination fee. A failure to make required payments can show up on the customer’s credit report and result in a collection action.
What does this mean for pet sellers? If you offer pet leases, you’ll want to be familiar with the Consumer Leasing Act (CLA), a law designed to ensure that consumers get meaningful disclosures about a lease before they sign on the bottom line.
The CLA requires, among other things, that your customers receive essential lease information, in writing, clearly and conspicuously, in language they can understand, before they sign the agreement. And if you advertise pet leases – even if only with a store display stating the low up-front payment amount needed to take a new pet home (“Take Rover home for just $50!”) – the CLA requires, among other things, that you clearly disclose that the deal is a lease, the total amount due at lease signing, and the number, amount, and timing of payments.
The FTC’s guide, Advertising Consumer Leases, can help you purr-fect your understanding of the CLA’s advertising requirements. Check it out. After all, compliance is not only the law, it also can help ensure that angry and broken-hearted customers don’t come back to bite you.