In less than two weeks, staff from Neighborhood Partnerships will travel to Washington, DC for the Assets Learning Conference hosted by the Corporation for Enterprise Development (CFED). CFED, one of our partner organizations, is dedicated to expanding economic opportunity for all Americans for over 30 years. The conference, The Assets Movement at its Moment: Creating the Save & Invest Economy, will convene over 1,000 leaders from the Assets & Opportunity field in Washington, DC, September 22–24. Find out more information about the conference here.
While at the conference, we will attend a session on Predatory Lending. According to CFED, this session “will address the policies at the local, state and federal levels that address predatory consumer lending—including payday loans, rent-to-own arrangements, predatory auto loans and refund anticipation loans.” These are all interesting and relevant topics to our work here in Oregon, in particular the pieces about refund anticipation loans.
In 2011, Our Oregon will begin working to curb the abuse of refund anticipation loans through legislative action, and Neighborhood Partnerships has recently signed on as a supporter of this effort.
Refund Anticipation Loans (or RALs) are short-term and high-cost loans for people expecting tax refunds. RALs are given to consumers by banks or tax preparers, and in exchange the bank or tax preparer then charges the consumer an interest rate and fees—all for loaning them their own money. In an age of e-filing and direct deposits, consumers could get their refund—all of it—from the IRS within as little as seven days, but they aren’t told this by tax preparers. Unfortunately, RALs are all too often sold to low income people who are receiving refunds such as the Earned Income Tax Credit (EITC) and can little afford the fees and interest rates charged by preparers.
Legislation proposed by Our Oregon would not eliminate Refund Anticipation Loans, or RALs. Instead, it has three key provisions:
- Taxpayers are given upfront, easy to understand information about all of the costs associated with the transaction.
- Prohibition of add on fees charged by tax preparers for the loans.
- Require RAL facilitators to be registered and bonded with the Oregon Board of Tax Practitioners.
The high fees and interest rates take money directly away from the most economically vulnerable households, and diminish the impact of important anti-poverty programs like the EITC. Giving consumers appropriate and complete information is only fair.
Anti-poverty programs like the Earned Income Tax Credit do work—but we have to make sure that people can access these programs, and that their impacts aren’t diminished by products such as refund anticipation loans. Oregonians deserve a Legislature that protects them from predatory lending and makes sure they have all the information they need to make good decisions.
At the Assets Learning Conference, we’ll be interested to hear how other states are handling refund anticipation loans and other forms of predatory lending.
More about the Assets Learning Conference:
This year’s conference remains the only place where a diverse group of leaders comes together to discuss innovations, vision and strategies in assets practice, policy and research. Building on the momentum from the 2008 conference, CFED is creating a program focused on the issues you care about the most, paying particular attention to the biggest challenges facing low‐ and moderate income American individuals and families.
With five exciting plenaries and 60 Concurrent Sessions we’re excited to learn the best and most effective practices, research and innovations at the local, state, national and international level in asset building, homeownership, entrepreneurship, children’s savings and education, behavioral economics, manufactured housing, community and economic development and much more.
In addition to an impressive slate of esteemed presenters, this year’s conference will once again feature advocacy visits on Capitol Hill. It will also feature the first‐ever Innovation Marketplace, a virtual and in‐person space for conference participants to interact with innovative leaders and entrepreneurs dedicated to addressing the challenges facing low‐income Americans. Visit www.assetsconference.org today!