Refund Anticipation Loans Research & Analysis

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Tax Refund Anticipation Loans (RALs) are short-term cash advances against a customer's anticipated income tax refund. But the loans are offered at high interest rates, ranging from about 40% to over 700% APR.  Here is some of the research available on this abusive financial product.

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  • Comment: Guidance Regarding Marketing of Refund Anticipation Loans (RALs) and Certain Other Products in Connection With the Preparation of a Tax Return
    April 7, 2008

    While we believe that many commercial RALs are abusive financial products that should not be available to consumers without significant protections beyond those currently available, we understand that the IRS does not have jurisdiction over the banks that make these loans. However, the IRS does have the authority to regulate the activity of commercial tax preparers and to sever the close link between the preparer and the loan that facilitates exploitation of taxpayers.

  • Consumers can file class actions against federally chartered banks who violate state laws
    April 21, 2006

    CRL's amicus brief in support of the plaintiff class in Hood v. Santa Barbara Bank & Trust. CRL argues that the National Bank Act's "visitorial powers" provision does not restrict private plaintiffs from bringing a class action alleging a violation of state consumer protection law before the California Court of Appeals, Second Appellate Division. The Court of Appeals reversed the trial court's dismissal of the class action in a September 2006 opinion published at 49 Cal. Rptr. 3d 369.

  • Refund Loan Products and VITA: A Summary of Issues and Options
    November 1, 2004

    Brief overview of tax refund products with discussion of the three major products: RALs, RACs and Stored Value Cards. Explores ways to design better versions of each product that meet market demand in a more consumer-friendly way.

  • Building a Better Refund Anticipation Loan: Options for VITA Sites
    November 1, 2004

    Discusses the costly effects of the current RAL market, makes the case that a well-designed RAL program can actually benefit consumers, and provides guidance on evaluating and developing a worthwhile RAL program.

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