New Report: Refund Anticipation Loans

Posted by on May 26, 2006

[posted from National Community Tax Coalition newsletter]

The National Consumer Law Center and Consumer Federation of America issued our annual report on Refund Anticipation Loans. I’ve pasted a link to the report below:

http://www.consumerlaw.org/action_agenda/refund_anticipation/content/2006RALReport.pdf

As well as to the press release:

http://www.consumerlaw.org/news/content/2006RALpressrelease.pdf

Key findings:
– RAL volume basically stayed the same from 2003 to 2004 at about 12 million(although there is some potential variance in the IRS data discussed in the report)
– Consumers paid about $1.24 billion if RAL fees plus $360 million in admin fees in 2004 (since they weren’t dropped until 2005/2006 for the major preparers)
– data from a CFA study on high cost borrowing finding RAL borrowers are vulnerable to high cost credit, such as rent-to-own, payday loans and pawnshop loans.
– the report includes a summary of RAL laws (including Connecticut’s rate cap), litigation, and review of new pre-filing season “pay tub” loans that are sold to borrowers as “don’t wait for your W-2”
– The Appendix to the report reponds to the RAL study done by Greg Elliehausen of Georgetown’s Credit Research Center

Thanks to all of you who work on this issue. We hope you find the report to be useful.