Jackson Hewitt Tax Service Inc., the second-largest U.S. tax preparer, said Tuesday it would stop offering "pre-season" tax-refund anticipation loans that some state officials and consumer advocates said took advantage of low-income taxpayers.
Finance companies that helped the firm provide the loans left the business and Jackson Hewitt decided to follow suit, the Parsippany, N.J.-based company said.
Consumer advocates and state officials including the California attorney general's office have said the loans unfairly took advantage of low-income taxpayers' need for instant cash, and charged exorbitant interest rates. Jackson Hewitt said in January it would pay $5 million to settle claims it used deceptive marketing to promote its loans in California.
Pacific Capital Bancorp, based in Santa Barbara, said Tuesday that it would no longer supply the loans.
Unlike other tax-refund anticipation loans that are made after a taxpayer has filed his return, the pre-season loans were made to people before they filed, based on their pay stubs.
Shares of Jackson Hewitt fell $1.08 on Tuesday to $27.77.