Cordray Alerts Ohioans to Instant Tax Return Schemes
ABC13 (OH)
January 19, 2010
Ohio Attorney General Richard Cordray is warning Ohio residents about tax preparation companies, payday lenders, and even car dealerships that are advertising tax refund products as "instant refunds". These refund anticipation loans (RALs) are provided based on a consumer's projected tax return and are accompanied by filing fees, tax preparation fees, and interest that steals up to 25 percent of the total tax refund. Cordray emphasizes the importance of consumer protection and suggests that taxpayers file their own return electronically and have the refund deposited into their bank account. He explains that Ohioans should "read the fine print and research alternative assistance options". The attorney general says Ohioans should keep an eye out for advertising that does not disclose the loan nature of RALs, fails to explain that the refund will go to the provider when an RAL is taken out, and fails to clarify that the taxpayer is borrowing against their anticipated refund -- not receiving the refund itself. He also cautions consumers to be wary of providers that fail to inform consumers that the RAL is an interest-bearing loan, charge a fee as a percentage rather than a flat rate, and fail to advise consumers of any other fees to which they may be subjected if the refund is delayed or if it is less than expected.
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