Jackson Hewitt

Greensboro, NC: (Jul-11-07) The North Carolina Office of the Commissioner of Banks filed a lawsuit against tax preparer Jackson Hewitt, alleging that it had concerns over the company's pre-file loan practices. The state had accused New Jersey-based Jackson Hewitt, which last reported quarterly net income of $27.5 million, of arranging tax refund loans for customers in which the proceeds of the loan were used to repay an earlier outstanding loan. According to the banking commissioner's office, using proceeds from a tax refund loan to pay off other debts is prohibited under North Carolina law. Such financing arrangements, which are often marketed several months ahead of when the borrowers will actually file their taxes, could sometimes lead to excessive interest payments.

As part of a settlement reached, Jackson Hewitt agreed to a fine of $148,261. Jackson Hewitt has already announced it would no longer facilitate pre-file loans. Under the terms of the settlement, it also agreed to stop making loan arrangements with bank partners that violate state law. [BUSINESS JOURNAL: PRE FILE LOAN]

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Published on Jul-14-07