Pet leasing is real and can catch owners by surprise. New Jersey lawmakers want to ban it.

Scott and Patricia Smith were looking for a new furry friend at a Middletown, N.J., pet store when they found Chase, a fluffy white Maltese.

It was June 2018, five months after their last dog died, and they quickly fell in love with the pup who curled up in Scott’s lap. With the decision made, Scott gave his debit card to pay $3,000 for the dog. But he said an employee at the store, Breeders Club of America, couldn’t process the payment and suggested they finance the dog, instead. The couple agreed, planning to pay off Chase in full when the first bill came.

What the Smiths didn’t know was that they did not own the dog they took home that day. Their puppy was actually the property of a Virginia lending company.

They had unknowingly leased the animal. Like a car.

The Smiths, of Little Falls, N.J., claim they paid hundreds of dollars more than expected because the store never told them they were leasing the dog. To purchase Chase weeks later, they had to spend more than $3,800 to buy out the lease agreement early.

“I went through all of that crap because they were being deceitful,” Scott Smith said. “I don’t know how you lease a living thing.”

Neither Breeders Club of America nor the financing company, My Pet Funding, returned requests for comment.

The Smiths are among consumers across the country who claim they were duped into signing lease agreements that cost much more than the sticker price of the pet. It’s unclear whether many others have had the same problem in New Jersey, as an animal rights group that has sued over the issue could name just one retailer in the state that offered pet leases: Breeders Club of America. An employee at that store said they don’t offer lease agreements anymore.

Still, state lawmakers sprang into action and passed legislation in June to ban pet leasing in the Garden State. The measure, aimed at protecting unsuspecting consumers who lease high-end pets they may otherwise can’t afford, is now before Democratic Gov. Phil Murphy, who can veto the bill or sign it into law.

“We looked into it and I believe there was an actual problem out there, and this will fix it,” said Assemblyman John Armato (D., Atlantic), a primary sponsor of the proposed law. “It is something that is emerging. It’s not prevalent right now, but without some kind of restraint, it would have gotten worse.”

Leasing a pet is a lot like renting an appliance, according to a copy of the Smiths’ contract. The agreement required the Smiths to pay $176 the day they took the pet home, followed by 29 monthly payments of $136 plus fees. At the end of the lease, the Smiths would have paid $4,011 for a dog valued at $3,159.

They still would have had to make an additional balloon payment of $505 to keep Chase, or as the contract affectionately called him: “the product(s).”

“You understand that this agreement is a lease, not a loan and that you are leasing the product(s),” the My Pet Funding contract said.

The contract also allowed the company to “take possession of the pet by any method or manner permitted by law" if the Smiths defaulted on the lease.

Kelsey Eberly, a staff lawyer at the Animal Legal Defense Fund, which opposes pet leasing, said her group is unaware of any cases in which a pet was repossessed. More commonly, she said, lease companies pass consumers who miss payments to debt collectors.

“But the threat of repossession is certainly very real for these consumers, because it is a specific term of these lease agreements,” she wrote in an email. “So it is, of course, very frightening, and keeps consumers paying the exorbitant monthly fees because they fear losing their family pet if they fall behind.”

Pet leasing companies pitch their products as a way to boost sales for retailers by giving consumers another way to pay for a pet. On its website, My Pet Funding said it approves customers “with no credit or bad credit when other companies cannot, helping more of your customers leave with their purchases every day.”

“Why miss out on a sale simply because a customer does not have enough money in their pocket?” the company’s website says.

Pet leasing is a relatively new industry, according to the Federal Trade Commission, which told pet sellers last year that they must disclose to consumers that the puppy deals are leases before they sign the agreement.

Breeders Club of America and My Pet Funding were sued in September by a pair of sisters from Sussex County who said they, like the Smiths, were tricked into leasing a pet. They claimed consumers are “convinced they are purchasing a dog, then face the impossible decision of whether to pay the inflated amounts required by the agreements, or potentially lose the dogs to whom they have become so attached.”

In that case, sisters Allison and Heather Schall said they agreed to pay $3,717 for a golden retriever, but the total lease obligation was $4,509, according to the complaint.

Monterey Financial Services, a California firm that services My Pet Funding leases, was also named as a defendant. The company president, Shaun Lucas, did not return requests for comment.

A Sussex County judge dismissed the case in March and told the Schalls to take their claims to arbitration.

The Schalls’ suit was brought on their behalf by the American Society for the Prevention of Cruelty to Animals (ASPCA), which also backed the New Jersey bill to ban pet leasing. Jennie Lintz, director of the ASPCA’s Puppy Mill Campaign, acknowledged there are existing consumer protection laws covering rent-to-own contracts, but said those laws typically deal with short-term agreements, not years-long leases such as the pet contracts.

Among other issues, consumers are often on the hook if pets get sick, and they can’t easily resell the animals if they can no longer care for them, she said.

“The idea of leasing a live animal, we believe, is a public policy issue in addition to a consumer protection one,” Lintz said. “It’s just not good for anybody and puts animals at risk.”

New Jersey lawmakers overwhelmingly approved the proposed pet lease ban on June 27. The Senate passed the bill 37 to 0, while the Assembly approved it 74 to 1.

The lone no vote, Assemblyman Erik Peterson (R., Hunterdon), noted that cows or horses are leased for breeding, and police K-9 and guide dogs can be leased, too.

“As long as everybody knows what the terms are and it’s not done with any kind of fraud or deceit, I don’t see what the problem is,” Peterson said. “Maybe they don’t have credit and they want to get a dog and this is one way of doing it. Leasing is just a different way of financing."

Under the New Jersey bill, pet dealers could face fines of up to $10,000 for a first offense and $30,000 for subsequent violations. The measure carves out purebred dogs and cats that are leased for breeding, as well as animals trained as police K-9 or guide dogs.

Five states have already outlawed pet leasing: California, Indiana, Nevada, New York, and Washington. Connecticut lawmakers are also considering a ban.

Pennsylvania State Rep. Jeanne McNeill (D., Lehigh) told 6ABC that she introduced a bill to ban pet leasing last year. As in New Jersey, it’s unclear whether pet leasing is prevalent in Pennsylvania.

“I’m not sure exactly where any are located,” she said. “I know as of right now, there is one in the Poconos. There may be more.”