Pet Rental Company Pays Charitable $ 190,000 to End State Department of Justice Investigation
Customers who obtained dogs or cats from a Portland-area pet rental and care company may soon find out where they came from, as part of a settlement with the Department of Oregon Justice.
Hannah the Pet Society, which has at times been controversial due to its unusual business model, last month signed an agreement with the Oregon Department of Justice that ends a long-running litigation and investigation into the consumer protection.
As part of the deal, the company does not admit any wrongdoing, but is also committed to clearly educating consumers about its products and services while complying with state laws governing deceptive marketing.
Fred Wich, CEO of the company, said of the deal: “There have been no findings of wrongdoing, no fines or penalties imposed.
“There are a few things we need to do that we could have fought for another two years and spent another million dollars,” he said. “We are happy to have him behind us and to move forward.”
The firm was founded eight years ago by Scott Campbell, a veterinarian turned entrepreneur with strong connections in Salem. He has expanded the Portland-area company, with outlets in Washington and Clackamas counties, to more than 6,000 customers, and hopes to attract investors to expand it nationwide.
These plans ran into an obstacle more than two years ago. The Justice Department launched its investigation into the company in mid-November 2015 based on consumer complaints that escalated after the company euthanized some of its pets later in the month. Some critics have claimed that the animals did not need to be slaughtered.
Based on complaints accusing the company of poor care and failing to deliver on promises made when signing up customers, the investigation extended to the company’s business model. Hannah operates as a “pet rental” company, taking possession of animals to circumvent insurance laws as well as regulations such as veterinary standards. It competes with pet insurers while functioning as a sort of pet HMO.
The DOJ never finalized his investigation. But after interviewing former employees and reviewing documents, the department cited evidence in court that it said suggests the company misled customers, provided improper veterinary care and set up a bogus non-profit organization as an intermediary to cover up a long-standing practice of buying dogs from traders. breeders – rather than buying them from shelters, as the company has repeatedly and publicly claimed.
Hannah called the DOJ’s allegations “unproven allegations with which we vehemently disagree” and threatened legal action against the state’s attempt to regulate the company as an insurer.
The settlement signed on January 11 is called voluntary compliance assurance. It follows a standard Ministry of Justice format and is in effect for five years. It does not include any admission of wrongdoing on Hannah’s part, but exposes the company to heavy fines if it breaks Oregon laws such as the Unfair Trade Practices Act – a law prohibiting deceptive marketing that underpins the state’s investigation.
The deal also covers two nonprofits created by Hannah the Pet Society – called the Pet Animal Welfare Society and Hannah’s Helping Hands – that the Justice Department suspected were created to buy animals from breeders. The deal forces them to close.
The agreement requires that within 30 days, Hannah notify all of her customers who have received a dog or cat purchased from a breeder of its origin. They will then be able to return the animal and have their registration fees reimbursed.
The agreement also requires that Hannah:
• Describe clearly and precisely the veterinary services it provides to its members in marketing materials.
• Change the name of her “Pet Nurse Helpline” to “Hannah Helpline” and train those who work there appropriately.
• Do not make misleading statements about the food it provides to members, the source of their pets, or the medical history of their pets.
• Clearly and prominently inform clients of the fees they will have to pay if they decide to adopt or repurchase their pet from Hannah.
• Make it clear to customers that Hannah owns all pets and has the exclusive authority to determine the treatment she provides, and also that Hannah’s care of animals is not subject to laws and regulations governing pets. veterinary care in Oregon.
• Pay $ 95,000 to the Oregon 4H Foundation, and an additional $ 95,000 to place pets free of charge with veterans, group homes, seniors’ facilities, or other charitable purposes.
Hannah has 60 days to rewrite her policies, procedures and marketing materials to comply with the regulations.
The company will still not be subject to insurance regulations or other stronger consumer protection measures the state had proposed for Hannah. Representative Brian Clem, D-Salem, an influential lawmaker who calls Campbell, the owner of Hannah a personal friend, did not include these protections in legislation last year that ensured the company would not be treated as an insurer, saying he thought the state investigation was too broad and unfair.
Wich, the CEO, says he thinks informing customers whose pets come from breeders “will be a non-event.”
And he said he hoped plans to attract domestic investors could continue. “It’s still our plan to expand this concept. It’s a great concept. It’s hard to do when you have this DOJ hanging over you. This is one of the reasons we’re so thrilled that … It’s over. We can move forward with the next steps in our strategic plan. ”
Clem, the lawmaker, said “It seems like a reasonable solution,” adding that the regulatory requirement that consumers be more clearly aware of the company’s legal obligations “is a good thing, I think, of the point. from the point of view of consumer protection “.
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