 The attorney general's suit, filed in Cook County Circuit Court,
seeks to shut down Mo' Money locations in the Chicago area and East
St. Louis and refund consumers at least $800,000 in estimated
losses."Without customers' permission, this company filed annual
tax returns riddled (with) errors and charged taxpayers exorbitant,
undisclosed fees, but worst of all, it failed to provide consumers
with their refund checks," Madigan said. "While the promise of fast
cash may be tempting, these heavily marketed refund services always
end up costing taxpayers much more in the end."
Madigan said the Memphis, Tenn.-based Mo' Money advertised its
tax refund anticipation programs primarily to low-income taxpayers
as a way to receive and spend refunds instantly. But Mo' Money used
these programs to automatically deduct hundreds of dollars in
undisclosed fees before consumers ever received their refunds -- as
much as $700 per person.
The attorney general also alleges Mo' Money filed tax returns
without consumers' authorization and in some cases fraught with
errors. For other consumers, Mo' Money charged fees to file Illinois
state tax returns but never completed the filings on taxpayers'
behalf. Consumers have waited weeks -- and many continue to wait --
to receive refund checks due to these alleged deceptive practices.
Madigan's office has received 76 complaints against Mo' Money
this year. Consumers have also contacted the Better Business Bureau,
city of Chicago and the Chicago Police Department.
Madigan urged consumers who had tax returns processed by Mo'
Money to contact the Internal Revenue Service at 800-829-1040,
800-829-4059 TTY or visit www.irs.gov. Taxpayers who receive a
refund from Mo' Money should not cash or deposit the check, and they
should contact the IRS immediately. Taxpayers who have already
cashed or deposited a refund check from Mo' Money should be very
cautious. These consumers may be subject to an IRS audit and
required to return their refund. Consumers should call the IRS
immediately.
Taxpayers audited by the IRS may be
eligible for free legal representation from one of the following
organizations:
-
Center for Economic
Progress: 312-252-0280
-
Loyola University
School of Law, Federal Tax Clinic: 312-915-7176
-
Prairie State Legal
Services: 630-690-2130 or toll-free 800-690-2130
-
Administer Justice: 847-844-1100 or
toll-free 877-778-6006
Consumers with questions about state income tax returns prepared
by Mo' Money can contact the Illinois Department of Revenue at
800-732-8866 or 800-544-5304 TTY.
[to top of second column] |
Beware the costs, risks of refund anticipation products
As a general warning, Madigan said that during tax season,
consumers should be aware of the high cost of refund anticipation
products -- called refund anticipation checks and refund
anticipation loans. This caution is particularly important for
Illinoisans eligible for the Earned Income Tax Credit, a federal and
state anti-poverty program for working families, to ensure they
maximize their returns.
Refund anticipation loans have interest rates running as high as
150 percent, which can reduce a taxpayer's refund by as much as 20
percent before they receive it. Refund anticipation checks, a
related product, are offered to taxpayers who do not qualify for a
loan. These checks simply allow the taxpayer to cash a refund --
using a check or a pre-loaded debit card -- after the IRS deposits
it in a temporary bank account. These products are similarly riddled
with high costs.
This year, Madigan is working with lawmakers to pass
Senate Bill 3523 to crack down on the high costs and fees
associated with refund anticipation products. The bill also seeks to
strengthen disclosure of fees and other costs to consumers, and it
provides for additional protections for consumers who obtain refund
anticipation loans from non-bank lenders, such as a payday lender.
"Every year during tax season, some tax preparers and lenders
take advantage of low-income individuals by charging them exorbitant
fees, on top of high interest rates, to get their refunds early,"
said Sen. Jacqueline Collins, Senate bill sponsor. "This legislation
will cap interest rates, prohibit fees charged in addition to
interest and give borrowers a chance to use their tax refunds as
intended -- to pay for needs like food, housing, clothing and
medicine. Last year we passed an increase in the state Earned Income
Tax Credit and put money back in the pockets of the working poor. I
want those eligible for the EITC to be able to keep and spend the
full amount of their refunds in our communities, not have to give it
to exploitative payday lenders or tax preparers."
"This legislation will impose first-time-ever limits on the
exorbitant fees that tax preparers are able to charge individuals
for these anticipation loans and checks," said Rep. Michael Zalewski,
House bill sponsor. "In effect, this measure will help ensure that
working families are able to keep a larger portion of their tax
refunds so that they stand a better chance of making ends meet in
this tough economy."
Assistant Attorneys General Jonathan Reischl and Vijay Raghavan
are handling this case for Madigan's Consumer Fraud Bureau.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan] |
