The New York Times

Metro Briefing | New Jersey
Trenton: Call To End Tax Refund Loans

The New York Times — January 17, 2007

Compiled by John Sullivan

As tax season begins, consumer advocacy groups from New Jersey and four other states called on Jackson Hewitt, the nation’s second-largest tax preparer, to stop offering refund anticipation loans, saying the loans are aimed at low-income taxpayers and carry effective interest rates ranging from 40 percent to 700 percent. The rates are possible in states that cap loan interest at 20 to 35 percent, like New Jersey, because the refund anticipation loans are issued through nationally chartered banks, which are exempt from state caps, said a spokesman for the New Jersey Citizen Action, one of the consumer groups. In a statement, a Jackson Hewitt spokesman did not address the groups’ charges, but said applicants are told about the terms of the loans.

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