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Predatory Debt Servicer Monterey Finance to Cancel All Outstanding Leases in New York, Providing Debt Relief To 835 New York Consumers
Let’s begin with a definition for “puppy leasing”: Pet stores used finance companies to enable consumers to “lease” rather than purchase a pet, a practice that has been illegal since 2018.
The New York Attorney General has reached a settlement with Monterey Finance, a California-based company that misled consumers into believing they’ve purchased animals from pet stores, when in fact the financing arrangement amounted to a “lease.” The company, a loan servicer and debt collection company that operated in New York and other states, worked with pet stores to create these financing arrangements which have exorbitant fees and no termination rights. The principals of Monterey Financial Services include Kevin Weiss (CEO) and Shaun Lucas (President/CEO), among others. The company is wholly owned by Monterey Holdings, LLC.
New York in 2018 passed a law banning pet leasing for companion animals, a practice known as “rent-to-own” where consumers do not own the pet until all lease payments are made. The ban on pet leasing was enacted to protect both consumers and pets from deceptive practices where individuals entered into high-interest agreements without realizing they did not legally own the animal.
Stemming from an investigation in the AG’s office, Monterey Finance has agreed to pay $175,000 in penalties and cease collecting on any debt that originated from a lease – erasing approximately $2.4 million in debt for New York consumers. Monterey will also cancel its leases in New York and request that Consumer Reporting Agencies erase any factors that negatively impacted a consumer’s credit score due to its leases. As part of the agreement, known as an “Assurance of Discontinuance,” Monterey neither admitted nor denied the AG’s findings. It says it agreed to the settlement to avoid the time, expense, and the distraction of litigation.
It also represented to the AG’s office it has not originated any new pet leases after 2017.
Monterey purchased and serviced leases for financed products such as furniture, pets, auto repairs and other consumer goods and services. Monterey often drafted the agreements and provided them to merchants to use for products and services that were generally worth between $300-$3,500. In many instances, consumers who entered into leases to finance the purchase of their pets were provided with documentation indicating they were the owners of their pets, when in reality the pets were collateral for the lease. Ownership wouldn’t transfer until the lease payments were completed, and a residual purchase payment and lease termination fee were paid.
Consumers who fell behind on their monthly lease payments were threatened with repossession or transfer to Monterey’s nonexistent “legal department,” including for the purchases of pets.
According to the AG, the practice resulted in consumers paying “well above the sticker price for pets,” and if payments were missed, the company threatened to repossess the animal or told consumers to surrender the pet to a local shelter. It is unclear whether any pet was repossessed.
In addition to the pet leasing ban, New York has implemented other animal welfare and consumer protection laws in recent years. As of Dec. 2024, pet stores in New York are banned from selling or leasing dogs, cats, or rabbits. Stores can, however, collaborate with registered, nonprofit animal rescue organizations to offer animals for adoption.
Despite its denials, this was not Monterey’s first run-in with pet leasing schemes. In 2022, it agreed to pay more than $900,000 to settle allegations that it was illegally leasing dogs in Massachusetts. As part of that agreement, Monterey ceased collecting on active leases, canceled about $700,000 in outstanding consumer debt on 211 dog leases — about $3,300 owed per lease — and transferred full ownership of the dogs to Massachusetts residents. The company also provided $175,000 in restitution to consumers and paid $50,000 to the state.
In 2021, Credova Financial, LLC and Nextep Holdings, LLC, also settled with Massachusetts to resolve allegations they violated state consumer protection laws. (Nextep Holdings is named in the New York case as a company that assigned lease contracts to Monterey Financial for servicing and collection.) The companies agreed to waive balances totaling more than $126,000 for consumers with existing dog leases, immediately transfer full ownership of dozens of dogs to the consumers, stop originating any new dog leases in the state, and pay a penalty of $50,000 to Massachusetts.
Complaints against Monterey Finance date back to 2018 when the Animal Legal Defense Fund and the Humane Society of the United States sent a complaint to the Federal Trade Commission (FTC) urging it to investigate the harmful pet leasing industry for deceiving consumers. The complaint asked the FTC to investigate Wags Lending, associated pet stores, and Monterey Financial for deceptive practices that misled consumers into signing leases for pets they believed they were purchasing.
States banning the practice of pet leasing are California, Connecticut, Indiana, Massachusetts, Nevada, New Jersey, New York, Washington, and Virginia.
