'interest rates from 40 to nearly 500 percent'

[tomm2thumbs]

Quickie tax-refund loans promoted by Magic Johnson prey on working poor, advocates say.

A broad smile spreads over Magic Johnson's face. "Sooner or later, we all need help," the former NBA superstar says into the camera. "If you need cash quickly, Jackson Hewitt has the Money Now loan. It's fast, it's simple - it's money like magic." But consumer advocates say the quickie tax-refund loans Johnson is advertising prey on the working poor. These refund anticipation loans - short-term cash advances against expected tax refunds - carry hefty price tags. On an annualized basis, the interest rates range from 40 to nearly 500 percent.

"These loans gouge (taxpayers) with all kinds of fees and ridiculous add-ons," said Kimberly Jones, policy advocate at the California Reinvestment Coalition. "When (low- or moderate-income) people have the right information, they can get their taxes prepared for free and receive all of the tax refund due to them."

But the lure of quick cash tempts plenty of people. About 1 out of every 15 taxpayers, or 8.7 million people, opted for the tax-refund loans in 2007, costing them $833 million in loan charges and another $68 million in related fees, according to Chi Chi Wu, a staff attorney with the National Consumer Law Center in Boston, who analyzed IRS data.

Full Article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/28/BU3K16M9S5.DTL&tsp=1

[YOY]

1. Well I can't totally blame Magic on this.

According to my sources (third person) he is dumber than a box of hammers but generally well-meaning.

Perhaps much like the working poor Jackson Hewitt duped he thought it was all on the up and up.

[rucky]

2. I think you're right.

going on my gut. let's see what he does now that the story's out.

[ThomWV]

3. Are you kidding? He's getting paid big time to say this shit - you call that stupidity?

I call it greed.

[YOY]

4. Perhaps it's both.

n.t.