JPMorgan Chase (NYSE: JPM) announced that it will no longer provide financing for tax-refund loans for about 13,000 independent prepares, according to a new report from Business Week which suggested that the move will help push customers toward H&R block.
JPMorgan decided that tax-refund loans no longer fit the company’s strategic plans.
Refund-anticipation loans are used to attract tax clients which need cash immediately by offering short-term loans based on the expected amount of their tax refunds. Consumer groups generally suggest avoiding refund loans because they put people into debt and have very high effective interest rates.
A number of banks, including HSBC, have also planned to stop offering refund loans.
“The reason HSBC is exiting this industry, even though they’re making $100 million a year in profit from it, is because of reputation risk,” said Liberty Tax Services CEO John Hewitt said in an interview with Business Week. “Bankers don’t like the consumer advocacy groups picketing outside their offices.”
