Download this document in MS Word format
BILL AS INTRODUCED 2007-2008

AutoFill Template

H.498

Introduced by   Representatives Pearson of Burlington, Aswad of Burlington, Donovan of Burlington, Fisher of Lincoln, Larson of Burlington, Lorber of Burlington, Weston of Burlington and Zuckerman of Burlington

Referred to Committee on

Date:

Subject:  Banking and insurance; refund anticipation loans

Statement of purpose:  This bill proposes to protect consumers who enter into refund anticipation loans and refund anticipation check transactions and to limit fees paid by consumers for such transactions.

AN ACT RELATING TO REFUND ANTICIPATION LOANS

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  9 V.S.A. chapter 63, subchapter 1C is added to read:

Subchapter 1C.  Refund Anticipation Loans

§ 2470e.  DEFINITIONS

As used in this chapter:

(1)  “Facilitator means a person who individually or in conjunction or cooperation with another person:

(A)  solicits the execution of, processes, receives, or accepts an application or agreement for a refund anticipation loan or refund anticipation check; or

(B)  in any other manner facilitates the making of a refund anticipation loan or refund anticipation check.

(2)  “Market” or “advertise” means to produce, distribute, broadcast, or otherwise display or have displayed written materials, oral statements, or visual materials describing the facilitator’s products and services.

(3)  Refund anticipation check means a check or other payment mechanism:

(A)  representing the proceeds of the consumer’s tax refund;

(B)  which was issued by a financial institution or other person that received a direct deposit of the consumer’s tax refund or tax credits; and

(C)  for which the consumer has paid a fee or other consideration for such payment mechanism.

(4)  “Refund anticipation loan means a loan that is secured by or that the facilitator arranges to be repaid directly or indirectly from the proceeds of the consumer’s income tax refund or tax credits.  A refund anticipation loan also includes any sale, assignment, or purchase of a consumer’s tax refund at a discount or for a fee, whether the consumer is required to repay the buyer or assignee if the Internal Revenue Service denies or reduces the consumer’s tax refund.

(5)  “Refund anticipation loan fee means the charges, fees, or other consideration charged or imposed directly or indirectly by the facilitator for the making of or in connection with a refund anticipation loan.  This term does not include any charge, fee, or other consideration usually charged or imposed by the facilitator in the ordinary course of business, such as fees for tax return preparation and fees for electronic filing of tax returns, if the same fees in the same amount are charged to the facilitator’s customers who do not receive refund anticipation loans or refund anticipation checks.

§ 2470f.  Posting of Fee Schedule and Disclosures

(a)  Every facilitator shall display a schedule showing the current fees for refund anticipation loans facilitated at the office, for refund anticipation checks facilitated at the office, and for the electronic filing of the consumer’s tax return.

(b)  Every facilitator shall also prominently display on each fee schedule:

(1)  A legend, centered, in bold, capital letters, and in 18-point type stating:  NOTICE CONCERNING REFUND ANTICIPATION LOANS; and

(2)  The following verbatim statement: “When you take out a refund anticipation loan, you are borrowing money against your tax refund.  If your tax refund is less than expected, you must still repay the entire amount of the loan. If your refund is delayed, you may have to pay additional costs. YOU CAN GET YOUR REFUND IN ABOUT 10 DAYS WITHOUT GETTING A LOAN.  You can have your tax return filed electronically and your refund direct deposited into your own bank account without obtaining a loan or paying fees for an extra product.”

(c)  The postings required by this section shall be made in no less than

28-point type on a document measuring no less than 16 inches by 20 inches. The postings required in this section shall be displayed in a prominent location at each office where the facilitator is facilitating refund anticipation loans.

(d)  No facilitator may facilitate a refund anticipation loan or refund anticipation check unless:

(1)  the disclosures required by this section are displayed; and

(2)  the fee actually charged for the refund anticipation loan or refund anticipation check is the same as the fee displayed on the schedule.

§ 2470g.  Application Disclosures

When a consumer applies for a refund anticipation loan or check, the facilitator shall disclose to the consumer on a form separate from the application in 14-point type, unless otherwise noted:

(1)  The fee for the refund anticipation loan or refund anticipation check.

(2)  The fee for electronic filing of a tax return.

(3)  The time within which the proceeds of the refund anticipation loan or check will be paid to the consumer if the loan or check is approved.

(A)  For refund anticipation loans, the following disclosures:

(i)  a legend, centered, in bold, capital letters, and in 18-point type stating: NOTICE; and

(ii)  the following notice:  “This is a loan.  This loan is borrowing money against your tax refund.  If your tax refund is less than expected, you must still repay the entire amount of the loan.  If your refund is delayed, you may have to pay additional costs.  YOU CAN GET YOUR REFUND IN ABOUT 10 DAYS WITHOUT GETTING THIS LOAN. You can have your tax return filed electronically and your refund direct deposited into your own bank account without obtaining a loan or other paid product.”

(B)  For refund anticipation checks, the following disclosures:

(i)  a legend, centered, in bold, capital letters, and in 18-point type stating: NOTICE; and

(ii)  the following notice: “You are paying [amount of refund anticipation check fee] to get your refund check through [name of issuer of refund anticipation check].  YOU CAN AVOID THIS FEE AND STILL RECEIVE YOUR REFUND IN ABOUT 10 DAYS BY HAVING THE IRS DIRECT DEPOSIT YOUR REFUND INTO YOUR OWN BANK ACCOUNT.  You can also wait for the IRS to mail you a check.”

§ 2470h.  Advertising and Marketing

(a)(1)  No facilitator shall market or advertise a refund anticipation loan without including this notice:

“[Name of product] is a loan.  You can get your refund in about 10 days without a loan or extra fees if you use e-file and direct deposit.”

(2)  For print advertisements, this information must be in type size one-half as large as the largest type size in the advertisement.  For radio and television advertisements, this information must receive at least seven seconds of airtime.

(b)(1)  No facilitator shall market or advertise a refund anticipation check without including this notice:

“The [name of product] costs [fee for RAC]. You can get your refund in about 10 days without this fee if you use e-file and direct deposit.”

For print advertisements, this information must be in type size one-half as large as the largest type size in the advertisement. For radio and television advertisements, this information must receive at least seven seconds of airtime.

§ 2470i.  Prohibited activities

No person engaged in the making of facilitating of a refund anticipation loan or refund anticipation check shall:

(1)  Engage in unfair or deceptive acts or practices in the facilitating of a refund anticipation check or in the making or facilitating of a refund anticipation loan, including misrepresenting a factor or condition of such loan or check or making any oral statements contradicting any of the information required to be disclosed under this subchapter.

(2)  Threaten to take any action that is prohibited by this subchapter or by any other law, or that the person does not actually intend to take.

(3)  Make or facilitate a refund anticipation loan for which the refund anticipation loan fee is greater than $25.00. 

(4)  Directly or indirectly charge, or arrange for the charging of, any interest, fee, or charge related to a refund anticipation loan or refund anticipation check, other than those specifically authorized by this subchapter, including but not limited to:

(A)  charges for insurance;

(B)  attorney’s fees or other collection costs; or

(C)  check cashing.

(5)  Include any of the following provisions in any document provided or signed in connection with a refund anticipation loan or refund anticipation check, including the loan application or agreement:

(A)  A hold harmless clause;

(B)  A confession of judgment clause;

(C)  A waiver of the right to a jury trial, if applicable, in any action brought by or against the consumer;

(D)  Any assignment of or order for payment of wages or other compensation for services;

(E)  A provision in which the consumer agrees not to assert any claim or defense arising out of the contract or to seek any remedies pursuant to this subchapter;

(F)  A waiver of any provision of this subchapter.  

(G)  A provision requiring that any aspect of a resolution of a dispute between the parties to the agreement be kept confidential.  This provision shall not affect the right of the parties to agree that certain specified information is a trade secret or otherwise confidential or to later agree, after the dispute arises, to keep a resolution confidential.

(H)  Take or arrange for a creditor to take a security interest in any property of the consumer other than the proceeds of the consumer’s tax refund to secure payment of a refund anticipation loan.

(I)  Directly or indirectly, individually or in conjunction or cooperation with another person, engage in the collection of an outstanding or delinquent refund anticipation loan for any creditor or assignee, including soliciting the execution of, processing, receiving, or accepting an application or agreement for a refund anticipation loan or refund anticipation check that contains a provision permitting the creditor to repay, by offset or other means, an outstanding or delinquent refund anticipation loan for that creditor or any creditor from the proceeds of the consumer’s tax refund.

(J)  Facilitate, refer, or solicit consumers on behalf of a third party engaged in check cashing for a fee, or permit third party check cashing for a fee in any place of business identified on the application for registration.

(K)  Facilitate any loan that is secured by or that arranges to be repaid directly from the proceeds of the consumer’s state tax refund from the State treasury.

§ 2470j.  REMEDIES

(a)  A violation of this subchapter or rules adopted under this subchapter are deemed to be an unfair or deceptive practice in commerce and a violation of section 2453 of this title.  The attorney general has the same authority to make rules, conduct civil investigations, and enter into assurances of discontinuance as provided under subchapter 1 of this chapter.

(b)  A consumer aggrieved by a violation of this subchapter or a violation of rules adopted under this subchapter may bring an action in superior court for appropriate equitable relief, the amount of the consumer’s damages, punitive damages in the case of a willful violation, the consideration or the value of the consideration given by the consumer, and reasonable costs and attorney’s fees.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us