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CALIFORNIA REINVESTMENT COALITION

COMMUNITY REINVESTMENT ASSOCIATION OF NORTH CAROLINA

NEIGHBORHOOD ECONOMIC DEVELOPMENT ADVOCACY PROJECT (NY)

NEW JERSEY CITIZEN ACTION

WOODSTOCK INSTITUTE (IL)

 

 

NEWS RELEASE

 

For immediate release:                             

Tuesday, January 16, 2007

 

For more information:

California Reinvestment Coalition, Rhea Serna, 415-864-3980
CRA-NC, Peter Skillern, 919-667-1557, ext. 22
NEDAP (NY), Sarah Ludwig, 212-680-5100 / 347-451-3742
New Jersey Citizen Action, Phyllis Salowe-Kaye, 973-220-3823
Woodstock Institute (IL), Tom Feltner, 312-427-8070

 

GROUPS FROM FIVE STATES DEMAND THAT JACKSON HEWITT END ABUSIVE LENDING PRACTICES

 

Organizations Call on Jackson Hewitt CEO & President to Pay Back

America’s Working Families, Present Giant Check for his Signature

 

JANUARY 16, 2007 – Five leading advocacy groups from around the country today called on Jackson Hewitt, the nation’s second largest tax preparer, to cease making high-cost tax refund anticipation and pay stub/holiday loans. To demonstrate their demand, they presented a 3-feet by 5-feet ‘rapid refund’ check in the amount of $74.5 million for Jackson Hewitt CEO & President Michael Lister to sign, at Jackson Hewitt’s national headquarters in Parsippany, New Jersey. The check, made payable to The Working Families of America, represents the amount of money Jackson Hewitt fleeced through its brokering of high-cost financial products in 2006. 

 

Refund anticipation loans (RALs) are abusive, high cost loans, secured by taxpayers’ projected tax refunds and Earned Income Tax Credits (EITC).  Aggressively marketed to lower income taxpayers as a way to obtain fast cash, RALs carry interest rates from 40% to 700%.  Taxpayers with a bank account who file their tax returns electronically can expect to receive their IRS refund and tax credits within days. 

 

“We are truly ashamed that a predatory institution like Jackson Hewitt calls New Jersey its home.  Refund anticipation loans from Jackson Hewitt and other major tax preparers strip low-income taxpayers of millions dollars annually,” stated Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, the state’s largest consumer watchdog coalition.  “Their massive marketing campaign targeted at low-income individuals is accompanied with high fees and exorbitant interest rates.”

 

“Groups have traveled to New Jersey from all over the country – California, Illinois, North Carolina, and New York – to join our friends in New Jersey in calling for an end to Jackson Hewitt’s exploitative practices,” said Sarah Ludwig, co-director of the Neighborhood Economic Development Advocacy Project, a community economic justice organization in New York City.  “Tax refund loans are part of a growing list of short-term, small loan products – such as payday loans, rent-to-own stores, bounce protection, and high-priced credit cards – that prey on poor working people and neighborhoods throughout the country.  The vast majority of Jackson Hewitt’s customers earn less than $35,000, and most of its RALs borrowers receive the EITC, one of the most important anti-poverty programs in the U.S.”

 

The Chicago-based Woodstock Institute had previously requested meetings with Jackson Hewitt CEO & President Michael Lister, but to no avail. “We have been forced to step up our pressure on Jackson Hewitt to eliminate predatory loans from their menu of products. Last year alone low income working families in the Chicago region paid $28 million in RAL fees.  We simply can’t afford to wait any longer,” stated Tom Feltner, spokesperson for the Woodstock Institute.

 

The groups explained that many RALs borrowers believe they are getting their actual refund, and do not understand they are receiving a loan.  “RALs and other products like Jackson Hewitt's Money Now Loan are not fast cash refunds but expensive and predatory short-term loan products,” stated Rhea Serna of the California Reinvestment Coalition.  “Jackson Hewitt customers need to be aware that if they are receiving a refund immediately – or even within a week – they are probably receiving a RAL rather than their actual refund. As an alternative, tax payers would be much better off filing their returns at free tax prep sites and seeking small loans at institutions like community development credit unions.”

 

“In total, more than $62 million a year in fees are charged to low income households in North Carolina to receive their tax refund.  In some North Carolina counties, 25% of tax filers applied for a refund anticipation loan.  Jackson Hewitt may be located in New Jersey, but as the second largest RAL provider, it has its hand deep in North Carolina consumer pockets,” said Peter Skillern, Executive Director of the Community Reinvestment Association of North Carolina (CRA-NC).

 

The five groups said that their protest of Jackson Hewitt was part of a larger effort to hold tax preparers and their partner banks accountable for their RAL products.  In addition to RALs, Jackson Hewitt has been marketing Holiday Express Loan Program (HELP) loans for several years, and last year introduced another pay stub RAL product, both available to taxpayers before they even receive their W-2 forms.  Taking Jackson Hewitt’s lead, H&R Block and Liberty Tax Service, which already offered RALs, this year introduced their own pay stub products.  Jackson Hewitt’s RALs, as well as its Holiday and pay stub loans, are financed by industry giants HSBC and Santa Barbara Bank & Trust. 

 

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