Predatory Loans

February 9, 2011

An important new resource is now available for Georgia’s consumers.

The Consumer Financial Protection Bureau (CFPB), established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has launched its website. The new agency sets out to make financial transactions more understandable for the average consumer and help protect them from the most unscrupulous lenders. To check out the website, click here.

The agency and its website are still a work in progress. A consumer response center will eventually be made available, as well as a dedicated education resource center. For now, some basic resources can be found on the CFPB website here. Consumers can also  submit comments and questions related to the agency here.

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Lawmakers must act to protect underprivileged Georgia communities from predatory tax preparers:

* The IRS currently requires tax preparers to disclose the financial terms of RALs, yet consumers continue to be duped into taking out high-interest loans at high costs because of the confusing financial fine print. Georgia law should force tax preparers to disclose the real terms of the loans in layman’s terms and strengthen penalties for tax preparers who fail to do so. This disclosure could be easily accomplished through fact sheets provided to consumers and displayed in plain sight in tax preparers’ offices. Read more

Paying to borrow your own money

Through Refund Anticipatory Loans (RALs) tax preparers, such as H&R Block, pressure consumers to take out high-interest loans carrying annual percentage rates as high as 700 percent. Most of these consumers are recipients of the Earned Income Tax Credit (EITC) – which helps moderate the heavy income tax burden for poor families – whose households would benefit the most from this annual tax relief. Read more