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Consumers took out more than 9 million refund loans in 2006, and paid more than $900 million in loan fees and $90 million in additional fees. McGowan said the company recently lowered the interest rate to 36 percent for refund loans, adding that, typically, clients who receive refund loans need money for some immediate expense, such as a broken-down car or a rent payment. According to the National Consumer Law Center, H&R Block and JPMorgan Chase have lowered their tax refund loan fees, claiming these loans bear an effective interest rate of 36 percent, the traditional small loan rate cap in many states. Critics of the loans include the Better Business Bureau and the Consumer Federation of American, as well as the Ohio Attorney General Marc Dann, who recently issued a statement condemning refund loans. A federal judge recently blocked key parts of a New Jersey law to limit interest rates and fees on tax refund loans. Dennis Ginty, spokesman for the Ohio Department of Commerce, said refund loans are not regulated by the department’s Division of Financial Institutions, and, to his knowledge, there is no state law that regulates such loans or limit the amount of interest rates associated with them. Find Out More

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