The North Carolina Commissioner of Banks is taking up the fight against the business practices at Mo' Money Taxes of North Carolina. On May 13th, the Commissioner will hold a hearing (in Re Mo' Money Taxes of North Carolina, and Derrick Robinson, #148671) to challenge Mo' Money the ability of Mo' Money Taxes to offer refund anticipation loans.
Mo' Money Taxes stands to lose its license to offer RALs. The enforcement could result in a temporary injunction, or a permanent block. Either way, the outcome would pose a significant threat to the ongoing viability of Mo' Money of North Carolina. Mo' Money leads with its RALs in its advertisements. Moreover, it is hard to see a distinction between getting your taxes done at Mo' Money and getting a RAL. There are no price disclosures at their offices, and customers are given an estimate of the cost of doing their taxes with a built-in line item for their RAL fees. The lack of disclosures is in and of itself a violation of North Carolina law. The Commissioner has already issued an enforcement order against Mo' Money for that violation in its stores. The Commissioner ordered to pay fines and commit to a five-year monitoring period.
The impact of the decision might be muted for the next tax season. Many consumers return to their tax preparer year after year, at any price point in the strata of tax preparation. With RAL consumers, it is no different. Most would likely return to Mo' Money next year with the expectation of getting another RAL. In the event that Mo' Money cannot offer RALs, most of their repeat customers will discover that incapacity only upon visiting the stores next year. That means that the drop-off in business from the lack of RALs would only be felt in 2012.
Mo' Money gets its RALs through JP Morgan Chase. Chase is one of the leading suppliers of these loans. They partner with more than 13,000 individual preparers. The relationship stretches the bounds of regulatory expectations. Chase is supposed to verify that its partners are following all applicable laws, from the Truth in Lending Act to Fair Debt Collection Practices Act to the Equal Opportunity Credit Act, as well as others. Next year, the IRS will also impose standards for training. The verifiability of these standards is still a question. While the FDIC has ordered Republic Bank of Kentucky to enhance its safeguards, there is still no explicit means for the public to ascertain that standards are being met.
I can't resist plugging CRA-NC's contribution to this hearing. Our research in their stores is listed as the fifth allegation in the filing. Therewere no disclosures present in any of the three stores that we visited. Tax fees were very high - about $305 for a basic non-itemized return with a W-2 and no business income. The RAL itself was less than $50, but additional fees were tacked on for a RAL that pushed the price above $100. For instance, RAL recipients have to pay a "technology fee," presumably for the use of computers. Although the returns of non-RAL users are also filed with computers, they do not pay a technology fee. There is also an e-file fee. Go figure. That must be why they call it Mo' Money, eh?