Big Win at HSBC on RALs

ACORN Financial Justice Ideas and Issues Personal Writings

New Orleans     A signature effort of the campaign conducted by ACORN with tax preparers over the last 4-5 years has been to either eliminate Refund Anticipation Loans (RALs) and similar products from the marketplace or failing to do that, reduce the predatory pricing that drives the product. In our the agreements to settle this campaign first with H&R Block three years ago and then with Jackson Hewitt and Liberty Tax Services six months and a year later, one of the biggest victories we won saw them reduce their fees on each RAL. The savings to consumers we calculated was probably around $250,000,000.

There was one set of fees though that in all of our negotiations with all of the companies we simply couldn’t get rid of no matter what we said and did. This fee, according to the companies, was imposed on the banks that were lending them the money to advance the tax refund. The key bank was HSBC. Our first meeting with them after the agreement with the preparers went nowhere, but we kept at it.

Pedro Rivas, an ACORN leader from New Jersey, the ACORN Financial Justice Center, and I met with HSBC representatives in New Jersey and their new manager to see if we could push the issue harder. Our timing was right in more ways than one. The new executive was reviewing the entire line of business and its impact on their brand and indicated that changes might be forthcoming as contracts were reviewed. When our ACORN team told him that we needed HSBC to drop their $25+ charge on each RAL, he indicated some confusion about the charge. We could not totally determine if they were getting the money or not, but felt like we made progress when he and others from HSBC agreed to review the matter and give it serious consideration.

Recently meeting with HSBC in Chicago at their US headquarters, we were very interested in what had happened to the RAL charges from HSBC, since it has been the lead lender in this niche business for tax preparers. To our delight Stuart Tait, the Managing Director for HSBC Tax Payer Financial Services, indicated that not only was there no longer going to be a fee collected by HSBC on RALs and similar products, but that HSBC under his direction and ACORN’s insistence had modified the software in six different places so that no fee could be collected or attributed to the bank! Sweet!!! We need to do the math, but this change, though it may seem small, likely saved consumers who are financially stressed and forced to select a RAL to get their refunds early another $200,000,000 this year!

Shoulders to the wheel and hands on the grindstone by ACORN delivers another one of those huge victories that does not even merit a press release because the issue is so far below the radar of the middle class public, but adds up to another huge win for lower-income families and ACORN members!