Attorney General Jay Jones Alerts Virginians About Their Rights Regarding Tax Refund Anticipation Loans During National Consumer Protection Week

Attorney General Jay Jones Alerts Virginians About Their Rights Regarding Tax Refund Anticipation Loans During National Consumer Protection Week

Richmond, VA –With tax season underway, Virginia Attorney General Jay Jones is alerting Virginians who might be considering tax refund anticipation loans about their rights under Virginia law. A tax refund anticipation loan is a loan made in anticipation of, and secured by, an individual’s federal or state income tax refund, or by both. Virginia law provides certain protections to Virginians considering or obtaining these loans.

“In these challenging economic times, many Virginians may be tempted by offers of tax refund anticipation loans,” said Attorney General Jones. “It is important that consumers research and consider all information about these loans in advance, including the loan fees and the loan’s annual percentage rate.”

Among other protections, Virginia law requires that applicants for a tax refund anticipation loan receive a disclosure before completing the application that clearly states:

• The refund anticipation loan fee schedule;
• That a refund anticipation loan is a loan and not the applicant’s actual income tax refund;
• That a customer can file an income tax return electronically without applying for a refund anticipation loan;
• The average amount of time it takes to receive a refund;
• That the IRS does not guarantee that it will pay the full amount of the anticipated refund and does not guarantee a specific date that a refund will be made;
• That the borrower must repay the loan and related fees if the tax refund is not paid or not paid in full;
• The estimated time within which the loan proceeds will be disbursed; and
• The fee that will be charged, if any, if the loan is not approved.

Before completing the loan transaction, the applicant must be provided:

• The estimated total fees for obtaining the loan;
• The estimated annual percentage rate for the loan; and
• The various costs, fees, and finance charges associated with getting a refund directly from the IRS, a refund anticipation loan, or any other refund options from the facilitator of the refund anticipation loan.

Virginia law also prohibits requiring a customer to enter into a loan arrangement in order to complete a tax return. If you obtain a refund anticipation loan, you have the right to rescind the loan on or before the close of business on the next business day by returning the check or loan money to the lender or the facilitator of the loan.

For more information about your rights, read the full text of the law here.

Virginians who have a question, concern, or complaint about a consumer matter should contact Attorney General Jones’ Consumer Protection Section:

###