By Curtis Black
May 5, 2010
Under pressure from consumer groups and increased regulatory scrutiny, JPMorgan Chase has announced it will no longer offer income tax refund anticipation loans, known as RALs.
Woodstock Institute president Dory Rand issued a statement commending Chase “for (finally) doing the right thing.”
“Chase’s exit from the market is the beginning of the end for RALs,” said Josh Zimmer of the Neighborhood Economic Development Advocacy Program.
Chase is the second of the nation’s three largest RAL lenders to leave the field. Santa Barbara Bank and Trust, which financed most of Jackson Hewitt’s RALs, was barred from the business by the Office of Comptroller of the Currency last year.
The third bank, HSBC, has announced it will stop financing RALs when its contract with H&R Block expires.
Chase offered loans through 13,000 independent tax preparers.
As detailed here in March, the OCC recently stepped up requirements for banks issuing RALs, the IRS announced that paid tax preparers will be required to register and demonstrate competency, and the Illinois Department of Financial and Professional Regulation barred consumer installment lenders from offering RALs.
“Consumer advocates aim to keep up pressure on banks and regulators in hopes that no consumers will lose their refund dollars through these wealth-stripping loans and that Treasury and IRS will continue to improve regulation of tax preparation companies and speed up delivery of refunds,” Rand said.