A federal judge has ruled against some of the main provisions of a New Jersey law restricting interest rates and fees that can be charged on tax refund anticipation loans, even though the annual percentage rates average 115 percent.

New Jersey has tried to place a limit on the amounts that can be charged for the loans. But U.S. District Judge Freda Wolfson noted that provisions of the federal National Banking Act block the state's ability to cap the rates. She said in her ruling that she appreciated the states' concern with protecting consumers but said the duty lies with Congress to fix the law.

Ten other states (California, Connecticut, Illinois, Minnesota, Nevada, North Carolina, Oregon, Virginia, Washington and Wisconsin) have passed laws regarding RALs, mainly requiring disclosure to consumers of the high rates, but only Connecticut and New Jersey have tried to cap the rates. Regulators in Massachusetts and Oregon have also issued warnings about RALs.

Last week, California Attorney General Edmund G. Brown requested that a state trial judge issue a preliminary injunction to force H&R Block to tell its customers that its "rapid refunds" are actually high-interest loans.

San Francisco Superior Court Judge Richard A. Kramer has scheduled a hearing for April 3 to decide on the request. It will be the latest move in a lawsuit filed by former California Attorney General Bill Lockyer against Block in 2006 accusing the tax prep chain of violating 15 federal and state laws in marketing the loans.

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