TRENTON – In order to better protect New Jersey taxpayers and consumers from being subjected to so-called “predatory tax refund anticipation practices,” as well as other commercial dealings deemed as abusive, the Senate passed bills that would update and strengthen the Consumer Fraud Act, and bringing greater clarity and transparency to common service contracts.
Under the first bill, S-891, sponsored by Senator Nellie Pou and Senate President Nicholas Scutari, tax preparation services would be prohibited from binding clients to refund anticipation check agreements for their tax return completions.
“Tax filing season serves as an opportunity of relief for many Americans facing difficulties balancing their family budgets. Although these refunds provide a needed boost at just the right time for many families, the filing process can be difficult to navigate, and low-income families in need of assistance can find themselves exposed to consumer protection risks when working with tax preparation services,” said Senator Pou (D-Passaic/Bergen). “This legislation will put the onus on tax preparers to explain fully to clients what is involved in a refund anticipation check, and prohibit them from requiring clients to enter into such agreements.”
The bill would also prohibit tax preparers from providing, offering or advertising refund anticipation loan or check services as free if the service results in, or is predicated upon, the assessment of higher or additional fees.
“These bills safeguards consumers by making sure companies cannot mislead their consumers and insure they get the money owed to them,” said Senator Scutari (D-Union/Middlesex/Somerset). “This is a great step forward in making sure our state’s consumers are protected. “
Additionally, currently required itemized statements of service charges and fees would also need to include charges and fees associated with refund anticipation loans and checks, as well as interest charged, including the estimated amount if a refund is delayed.
The bill would expand current protections to cover these predatory practices, by coupling consumer protections against refund anticipation loans and checks, and would also increase cost transparency and allow for price comparison of these services.
A recent Consumer Federation of America (CFA) poll found that 89% of respondents supported requiring paid preparers to supply an upfront list of fees.
A second bill, S-902, also sponsored by Senator Pou, would establish consumer protection requirements for service contract providers, or companies that offer contracts purporting to cover repairs to a consumer’s home, car, or other goods.
The bill would prohibit service contract providers or administrators from including the words “insurance”, “casualty”, “surety”, “mutual” or any other word descriptive of the insurance, casualty, or surety business in its products, and description of products, advertisement or any other materials. Currently, providers or administrators are prohibited from using these words in their name.
“Because of the lightning speed of technology nowadays, even the most practical household contracts, maintenance or services can fall prey to predatory practices, misinformation, or a lack of information that might harm New Jersey consumers,” added Senator Pou. “Our goal with these bills is to make our state more affordable, and make it operate more equitably and more efficiently for people just trying to live their daily lives.”
The bills were released from the Senate by a vote of 38-0 and 39-0, respectively.