A group of children has been accused of sickening acts of cruelty to animals in a Mount Warrigal neighbourhood including setting family pets on fire and trying to skin a fox alive.
Residents say because of the age of the children, believed to be about 11 or 12, there has been confusion and frustration over how to deal with the incidents.
One resident, who did not want to be identified due to fears he would be targeted, said the community was sick of being told that nothing could be done.
"It seems no-one wants to know about this problem," he said.
He said the children had been seen taking pets from backyards in broad daylight and said one resident saw the group chase a fox, catch it and try to skin it alive before an adult stopped them.
"What these kids are doing to these animals is disgusting and is animal cruelty and needs to be stopped before ... it goes to the next level," he said.
In a separate incident, children were witnessed "kicking" a pet guinea pig to one another. The guinea pig was rescued, but neighbours have learnt not all animals have been as lucky, and some have simply disappeared.
An open letter earlier this week from a concerned resident led to meetings with Shellharbour City councillors.
The RSPCA was also informed and a spokesman confirmed earlier this week it was "taking these allegations very seriously and has started an investigation into the alleged offences".
"Where necessary, RSPCA inspectors will work alongside local police, who have also been notified of the incidents," he said.
Under the Prevention to Cruelty to Animals Act, the maximum penalty an adult could face would be a fine of $22,000 and/or two years' imprisonment.
However, the RSPCA spokesman said it was difficult to predict what penalties offenders would receive in the event they were found to be juveniles.
Shellharbour Mayor Marianne Saliba said cruelty to animals was not an issue council dealt with directly, and also referred the matter to the RSPCA.