State Rep. Jehan Gordon (D-Peoria) is pushing legislation to regulate heavily advertised tax refund anticipation loans to ensure they do not carry hidden fees or exorbitant interest rates.
“When it comes to filing taxes, everybody is excited about the money they might get back, and as families struggle through these difficult economic times, I want to protect them from the unscrupulous lenders who try and take advantage of the situation,” Gordon said. “This legislation works to make a distinction between the businesses operating in good faith and in the best interests of our community and lenders who target families and individuals who are most in need with refund anticipation loans.”
Senate Bill 3523 caps interest rates on refund anticipation loans and requires lenders to clearly display the terms of the loan, including any and all fees that maybe involved. In addition, lenders must inform customers that a refund anticipation loan may not be necessary as filing a tax return electronically and using direct deposit will allow the customer to receive their refund in eight to 15 days with no extra fees. The legislation provides that this only applies to individuals, firms, partnerships or corporations who are offering these loans, and not to state or federally license lending institutions like banks or credit unions.
“I do not want to see families or individuals get trapped into paying hidden fees or exorbitant interest rates for money they might not have to borrow,” Gordon said. “This legislation will work to ensure that individuals are educated about tax refunds and the timeliness of e-filing to prevent them from being preyed upon by lenders.”
The legislation, which was approved unanimously by the Senate last month, is supported by Attorney General Lisa Madigan. For more information on this or any of Rep. Gordon’s legislation, contact her district office at (309) 681-1992 or by email at email@example.com.