My friend filed his taxes on line and a few weeks later received a check for less than the amount of his refund. He was confused because he thought he had selected automatic deposit. Turns out, it was a refund anticipation loan from a Califonia Bank.

I looked at it and it was incredibly misleading. No where on it did it say it was a loan. No interest rate was disclosed. The only way I could tell that it was a refund anticipation loan was by the tiny print saying how much you would owe if you cashed the check. I googled the name of the company and saw they did much business in refund anticipation loans.

I just don't get it. Shouldn't there be more explanation to the consumer as what this is- an extremely high interest rate loan? Shouldn't there be an interest rate disclosed? It was confusing for me (a bank internal auditor) to figure out what it was. He took it to his bank and they thought it was his tax refund from the IRS!

Has anyone seen these? It just doesn't seem right without more disclosure.

It is not right if you have the whole story and a copy should be sent to both States Attorney General's Office or Consumer Protection Agency.

In 2004 this was a big customer service issue for H&R Block and then a problem for Jackson Hewitt. I suggest checking the wesite for the Co that issured the "loan" and check with the your States Attorney General's office and the office of where the Co is located. There are laws set up to protect the consumer.

Thanks for the replies. I wonder what my friend did when filing his taxes to have this sent?

http://www.bizjournals.com/louisville/stories/2009/03/23/daily53.html

Related story.

Andy - I almost went to work for them last fall in this area as compliance officer. They really are a good bank.

I suppose with your guidance they could have been a little bit better. At least in this area.

This is just one area. The hardest thing is dealing with a RAL, from when I looked at them, was that they generally do pay quickly. While the APR can be based on a year, when the maturity isn't specified, the real return can be lucrative. ANd consumers jump on this all the time.

And you have to be very careful not to extend that kind of loan to an individual protected under the DoD rules on lending to servicemembers and their dependents.