Fighting RALS

Fighting Refund Anticipation Loans
RALS are high-cost loans on tax refunds targeted at low-income families
Refund Anticipation Loans drain the assets of those least able to afford high fees. What's more, most RALs go hand in hand with the
Earned Income Tax Credit. The EITC is an excellent program, but RALs thwart its inspired and well-implemented mission to reward
work and support low-income households.

Fast Cash, Less Filling: Refund Anticipation Loans in North Carolina
March 24, 2009
This report documents the impact of RALs in North Carolina. We show the most affected zip codes in the state, the communities
with the highest rates of RAL usage (both in terms of all residents and low-income households), as well as the impact of the EITC. Our
paper includes a set of easily actionable policy ideas that would alter the scourge of RALs in our state.
Read the full report here.
Read the Executive Summary here.

More CRA-NC research on RALs:
• Tax Preparers Take a Bite our of Refunds: Mystery Shopper Test Exposes Refund Anticipation llllLoan Abuses in Durham and
Philadelphia
• 2006 RAL Report
• CRANC Comment Letter
• RAL Usage prevalent in Low Income Zones (MAP)
• Refund Anticipation Loan Offices in North Carolina (MAP)
RAL Usage Often Highest in Minority Zip Codes (MAP)

CRA-NC Press on RALs
California Attorney General settles RAL suit, cites work of CRA-NC (American Association of Justice subscription required). Edmund
Brown, Jr. settles with RAL providers over a suit claiming deceptive marketing. "If RAL lenders disclosed the loans' true costs," PIRG
consumer program director Ed Mierzwinski says, "no one would get them." CRA-NC Executive Director Peter Skillern points out that
Santa Barbara Bank & Trust (PCBC) is a leading provider of RAL funding. Santa Barbara's corporate parent, Pacific Capital Bancorp,
received $181 million in TARP funds.
"Santa Barbara is feeding off of taxpayer money twice in making RALs this upcoming tax season," said Peter Skillern. "First, Santa
Barbara is skimming off hundreds of millions in refund dollars in making RALs to working families. Second, it is funding its RAL loans
using tax dollars from the bailout."

The EITC, often sapped by RALs, can be an effective means for savings. CRA-NC supports the split refund, a new rule by the IRS
that allows filers to allocate portions of their refund to different accounts.
Deceptive Marketing: Would you get medical advice from a baseball player? No! Don't let a basketball player tell you where to get
your taxes done. Especially if that player is more worried about tax treatment on his hedge fund investing.
TARP funding for RALs?
MSNBC calls out Pacific Capital Bancorp (PCBC), having found that TARP funds will provide liquidity for its
Refund Anticipation Loans (RALs).

Our partners in the fight:
• National Consumer Law Center • EITC Carolinas
• Americans for Fairness in Lending • California Reinvestment Coalition
•NC Justice and Community Development Center • NC NAACP
• North Carolina Department of Labor• The City of Durham •The County of Durham
The IDA and Asset Building Collaborative of North Carolina