JPMorgan Chase has begun sending out notices to approximately 13,000 independent tax preparers that it is exiting the refund anticipation loan business.
The banking giants move comes on the heels of Santa Barbara Bank & Trust exiting the RAL business this tax season, which forced Jackson Hewitt to scramble for other RAL partners (see Jackson Hewitt RAL Program Remains Underfunded).
The loans have attracted a backlash from consumer advocates, who have complained about the high interest rates and warned many consumers to steer clear of the loans. HSBC has also announced that it plans to leave the RAL business when its current agreements end. The move is expected to benefit H&R Block, which continues to offer the loans, along with Liberty Tax Service. JPMorgan Chases decision was initially reported by American Banker.
JPMorgan Chases decision to pull out of the refund anticipation loan business, along with a growing list of others in the financial services industry, will ideally herald the ultimate and long-overdue demise of these predatory and unnecessary loans, said New York City Consumer Affairs Commissioner Jonathan Mintz in a statement. In New York, our enforcement agents find year after year that tax preparers generally need to lie about these terrible loans to sell them, misrepresenting them as rapid refunds rather than costly loans that drain much-needed dollars from those who can least afford it. And because these high-priced RALs go to low-income wage-earners, it siphons taxpayer dollars away from the Earned Income Tax Credit, which Congress specifically intended to help working individuals with low and moderate incomes. Its time to ban these loans once and for all so taxpayers get every penny of the tax refunds our elected officials intended them to receive.
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