Liberty Tax Service Loses Deceptive Ad Suit


Liberty Tax Service, the third largest tax preparer in the U.S., has lost a lawsuit over deceptive ads that California Attorney General Jerry Brown claimed blurred the line between free tax refunds and expensive refund anticipation loans.

“Liberty Tax Service lured cash-strapped Californians into paying for high-cost loans, when they could obtain tax refunds free from the IRS just weeks later,” said Brown in a statement. “This ruling bars Liberty from deceptive advertising that blurs the line between IRS tax refunds and pricey loans.”

Liberty Tax Service’s print and television ads misled customers by promising “Most Refunds in 24 Hours,” according to Brown.

In reality, Liberty was selling refund anticipation loans, not a tax refund. Customers had to pay an upfront fee of about $30 plus interest, at a rate that could be as high as 395 percent annually. According to the IRS, refund anticipation loans target low-income taxpayers, especially those who receive the Earned Income Tax Credit. Approximately 70 percent of Liberty’s refund anticipation loan customers in 2006 and 2007 received this credit. A spokesperson for Liberty did not immediately respond to a request for comment. More.

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