The Denver Post Reports that income tax refund anticipationchecks are up 17 percent from 2001, according to IRS data, and the IRS iscalling for new powers to regulate the tax preparing industry. But the Post’sstory conflates refund anticipation checks with prepaid cards.
Cash-strapped Americans eager fortax refunds are increasingly turning to payment advances, prepaid cards andother costly services when getting tax preparation help, according to newfederal data, raising concerns among regulators about whether consumers arefully informed about the fees.
If anything, prepaid cards can help refund recipients avoidthe costs of anticipation loans and other products. Receiving direct deposit toa prepaid card can reduce the time it takes to receive a refund, make the moneyavailable for immediate spending, and eliminate check cashing for those whostill receive paper checks. All of these things might mean that a recipientusing a prepaid card might not need an anticipation loan.
Prepaid is a separate product from refund anticipation toolsand should be treated as such by the regulators and the press.
Overview by Ben Jackson, Director, Prepaid Advisory Service for Mercator Advisory Group
Read full story at the Denver Post