Tax preparation service Jackson Hewitt Inc. will pay $5 million to settle allegations that it violated state and federal laws when marketing its refund anticipation loans to California customers. California Attorney General Bill Lockyer said that the tax preparer will pay $4 million in restitution to customers who purchased same-day "Money Now!" loans and other loan products. The company will also pay $500,000 in civil penalties and $500,000 to reimburse investigative costs.Lockyer's complaint alleged that Jackson Hewitt violated 13 state and federal laws, and also shared consumers' tax information without their consent.

Customers could receive up to $30 per RAL purchased between 2001 and 2004, and up to $15 for each additional financial product purchased. Jackson Hewitt must change its future practices, including the methods used when informing consumers about the terms of RALs compared to other refund options.

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