Mark Winston Griffith

Stick a Fork in it: Paystub Tax Loans are Done

A few weeks ago I took a moment to gloat about HSBC's announcement that it would stop making "paystub" and "holiday" loans, two abusive, unsecured, loan products that were offered to mostly low-income taxpayers, sometimes months before the tax season even began. Now, I'm happy to report, the two remaining banks - JPMorgan Chase and Santa Barbara Bank & Trust - that peddled these products through tax prep brokers like H&R Block, Jackson Hewitt and Liberty Tax Service have also announced over the past few days that they will follow HSBC's lead and discontinue their paystub product lines.

Let's be clear. HSBC, JPMorgan and Santa Barbara continue to make "traditional" refund anticipation loans, which, unlike the exotic paystub variety, are actually secured by a person's tax refund. In other words millions are still being ripped off from low-and moderate income communities through a practice that exploits the cash flow needs of Earned Income Tax Credit recipients and other low-wage taxpayers. And while the demise of paystub loans was obviously instigated by the tireless advocacy and community organizing of organizations from across the country, including the Neighborhood Economic Development Advocacy Project (NEDAP), some speculate that paystub loans were ultimately ditched because they were money losers.

Nonetheless, this is a victory for low-income communities and neighborhoods of color that we can all take some comfort in. Meanwhile struggle against predatory lending continues.

Mark Winston Griffith: Author Bio | Other Posts
Posted at 9:19 AM, Apr 13, 2007 in Financial Justice
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