Consumer groups cheer decision by H&R Block to discontinue refund anticipation loans
October 05, 2011
Consumer advocates applaud the announcement by H&R Block, the nation’s largest tax preparation chain, that it won’t offer refund anticipation loans in 2012.
RALs are one- to two-week loans made by banks and offered by tax preparers, secured by the taxpayer’s refund.
“H&R Block did the right thing by deciding to ‘just say no’ to RALs,” Chi Chi Wu, an attorney for the National Consumer Law Center, said in a statement. “We have criticized these loans as high cost and risky for over a decade, and we are pleased that Block has actively decided not to offer them.”
RALs can be expensive; earlier this year, one bank charged $61.22 for a RAL of $1,500, which translates into an APR of 149 percent, Wu said.
RALs target low-income taxpayers, especially recipients of the Earned Income Tax Credit, a tax break for working poor families. In 2009, RALs skimmed more than $600 million from the refunds of 7.2 million American taxpayers.
The Consumer Federation of America and Community Reinvestment Association of North Carolina also have worked on getting banks and tax preparers to abandon RALs.
You can follow this conversation by subscribing to the comment feed for this post.