Household HSBC Watch

On one hand HSBC spokesman Michael Trevino said tax refund loans “represents a very small portion'’ of HSBC’s revenue. On the other hand such loans represent bad publicity for HSBC, with interest rates sometimes over 100 percent. Lawsuits such as Carnegie vs Household, paid by HSBC in 2007, cast HSBC in a bad light. Now the IRS finally stepped up to do the right thing as fraud finally caught their attention. In a recent interview with a former H&R Block employee we were told of fraud that was clearly obvious in 2003. Cases involved children without social security numbers, people claiming other people’s children, earned income fabrications and more.

The Internal Revenue Service said it may try to restrict tax preparers such as Jackson Hewitt Tax Service Inc. and H&R Block Inc. from offering refund loans and audit insurance because those products can encourage fraud. The plan, if adopted by the IRS, would prohibit tax preparers from passing along tax return information to lenders who provide instant refunds and then in some cases charge customers triple-digit interest rates to repay the loans. Consumer groups and taxpayer advocates have urged the government to crack down on such practices.

Preparers such as Jackson Hewitt and H&R Block contract with lenders such as Household International and HSBC Finance to give instant refund loans to consumers. Aside from the obvious complaints one should also consider that the lender takes a percentage of earned income credits and other programs designed to benefit children and low income families. Opponents also said predatory lenders should not be an unofficial collections agent for the IRS.