Wednesday, January 31, 2007
Taxpayers Get Two More Days in 2007!
The Internal Revenue Service has announced that the traditional April 15 tax deadline date has been extended for two days until April 17.
The move has ample precedence. April 15, 2007 falls on a Sunday, and taxes are not due on Sundays partially because the U.S. Postal Service is closed. Monday, April 16, is Emancipation Day in the District of Columbia. Despite still not having full voting representation in Congress, the hundreds of thousands of District residents managed to buy the entire country another day's worth of interest...or at least more time to prep their paperwork.
Labels: IRS, tax deadline
Monday, January 29, 2007
EPA Looks To Reduce Water Flow In Toilets Even More
The satisfying
woosh of water tumbling out of an old style toilet tank convinced many consumers that they could never make do when 1.3 gallons per flush toilets were introduced. There was even a quick run-up on sales at eBay and other online traders as consumers sought to have the higher volume toilets installed in their homes.
Now the U.S. Environmental Protection Agency is going a step further, or a few drops backward. The agency's new WaterSense program offers a label to those toilets that perform their assigned tasks at a volume less than 1.3 gallons per flush.
The labeling program and lower volume toilets are voluntary at this writing. The new toilets are the product of extensive research in fluid dynamics conducted over the last six years. While the exterior differs little from traditional toilets, interior redesign and new mechanical approaches significantly improve flow and reduce water usage.
During the development of its WaterSense program, EPA analysis determined that toilets represented a significant target for its water-efficiency activities. Toilet usage accounts for nearly one-third of home water consumption.
It is estimated that high-efficiency toilets can reduce water bills by about 10 percent. Replacing older, inefficient toilets, which are responsible for much of the water wasted in American homes, could save more than 900 billion gallons of water a year – enough to supply almost 10 million households.
WaterSense-labeled toilets are certified by independent laboratory testing to meet rigorous criteria for both performance and efficiency. Only high-efficiency toilets that complete the third-party certification process can earn the WaterSense label.
WaterSense is a voluntary public-private partnership that recognizes high-performance products and processes. The WaterSense program also seeks to promote consumer use of water-efficient products, certification for water industry professionals, and innovation in water-efficient product manufacturing.
Companies that manufacture, sell or distribute household plumbing fixtures are encouraged to join the WaterSense program, which is also open to water utilities, trade associations, state and local governments and non-governmental organizations.
Thursday, January 25, 2007
Advocacy Group Takes On Big Pharma For Citizen-Journaist Writing On Wiki
The Electronic Frontier Foundation (EFF) went to court to defend the First Amendment rights of a citizen-journalist to link from a public "wiki" to electronic copies of damaging internal Eli Lilly documents relating to the controversial prescription drug Zyprexa.
At the hearing, federal district Judge Jack B. Weinstein refused to change his order blocking publication of material that would "facilitate dissemination" of the Lilly documents.
EFF's client, an anonymous citizen-journalist, posted the links on the wiki located at
http://zyprexa.pbwiki.com. Eli Lilly complained, and Judge Weinstein issued his order on January 4. EFF went to court to challenge this order as an unconstitutional prior restraint on free speech in violation of the First Amendment and to ensure that the right of nonparties in the litigation to link to publicly important information remains protected.
"Preventing a citizen-journalist from posting links to important health information on a public wiki violates the First Amendment," said EFF Senior Staff Attorney Fred von Lohmann. "Eli Lilly's efforts to censor these documents off the Internet are particularly outrageous in light of the information reported by The New York Times, which suggests that doctors and patients who use Zyprexa need to know the information contained in those documents."
According to
The New York Times reports, the Eli Lilly documents show that the company intentionally downplayed the drug's side effects, including weight gain, high blood sugar, and diabetes, and marketed the drug for "off-label" uses not approved by the Food and Drug Administration (FDA). The documents were leaked from the ongoing Zyprexa products liability lawsuit, where Weinstein is the presiding judge.
Copies of the leaked Eli Lilly documents have appeared on a variety of websites and other Internet sources. The links to the documents that were posted on the wiki at http://zyprexa.pbwiki.com were part of extensive, in-depth analysis from a number of citizen journalists. A wiki is a website that allows many users to collaborate on its content, creating a kind of simple database for collecting information -- in this case, about the controversy surrounding Zyprexa.
Zyprexa is Eli Lilly's best selling drug, used to treat schizophrenia and bipolar disorder. Eli Lilly has agreed to pay up to $500 million to settle claims relating to Zyprexa. This latest settlement brings the total paid by Eli Lilly to resolve lawsuits involving Zyprexa to more than $1.2 billion.
Full motion filed in the Zyprexa products liability litigation.
The court's order of January 4.
http://eff.org/legal/cases/zyprexa/jan4_order.pdf
Wednesday, January 24, 2007
HighChairs Recalled After Nearly 20 Incidents
Graco® Contempo™ Highchairs and the United States Consumer Product Safety Commission have issued a recall for 100,000 highchairs because of a potential collapsing hazard. According to the company and the government agency, there have been 18 reports to date of the chairs collapsing with a child in them. Several resulted in minor injuries and seem to occur if the chair is not fully opened and locked into place.
The Contempo™ highchairs have an “A” frame design. The highchairs feature six height adjustment positions and three recline positions. The recalled highchairs have model numbers that begin with 3800, 3803, 3804, 3805, 3810 and 3811 followed by a three letter fashion code. Model numbers included in the recall include: 3800COU, 3800DRB, 3800FMT, 3800GGG, 3800GRM, 3800HEM, 3800JEN, 3800LEG, 3800MNS, 3800OWD, 3800SND, 3800TFE, 3800RIT, 3803HRL, 3804CNR, 3805BDA, 3810PEW, 3810PST and 3811PST. The highchairs were manufactured from October 27, 2005 through November 22, 2006. The model number and manufacturing date are printed underneath the snack tray of these highchairs.
The company is offering consumers a free repair kit. The company also advises consumers that they can continue using the chair but not to place a child in the chair until the chair is fully opened and a clicking sound is heard.
To talk with a Graco representative about this recall, call toll-free at (877) 445-1312 anytime.
Tuesday, January 23, 2007
Chrysler Recall Data Now On Carfax Reports
The Chrysler Group has teamed up with Carfax to ensure consumers are better informed about their vehicles’ maintenance needs. Open recall information for all Chrysler Group vehicles is now being reported to Carfax. Used car shoppers can quickly find out if open recalls exist for every Chrysler, Dodge and Jeep vehicle through Carfax Vehicle History Reports.
“We are always looking for ways to improve the value of our vehicle history information by expanding its scope,” said Larry Gamache, communications director at Carfax. “This important information helps Chrysler Group customers properly maintain their vehicles to meet the manufacturer’s safety and performance standards as well as retain its resale value.”
With the addition of the Chrysler Group, Carfax now receives VIN-specific open recall data from 18 manufacturers. More than 30,000 dealers and millions of consumers rely on this type of vehicle history information from Carfax to make better decisions about the used cars they buy and sell.
Monday, January 22, 2007
AARP Finds Americans Over 50 Not Discussing Alternative Medicines, Despite Taking Them
In spite of the high use of complementary and alternative medicine (CAM) among people age 50 or older, 69 percent of those who use CAM do not talk to their doctors about it, according to a new survey conducted by AARP and the National Center for Complementary and Alternative Medicine (NCCAM) at the National Institutes of Health. The survey examined conversations between patients and their physicians regarding CAM use.
CAM is a group of diverse medical and health care systems, practices, and products that are not presently considered to be part of conventional medicine. It includes such products and practices as herbal supplements, meditation, homeopathy, and acupuncture.
"We know that people 50 and older tend to be high users of complementary and alternative medicine, but this study was the first to explore gaps in communications regarding the use of CAM between patients and their physicians," said Cheryl Matheis, AARP Director of Health Strategies. "Communication is important to ensure the wise use of all conventional and CAM therapies."
Differences in communication practices across demographic groups were also found. Women were more likely than men to have discussed CAM use (26 percent versus 16 percent) and what types of therapies to use (70 percent versus 51 percent). In addition, people with incomes of $75,000 or more (31 percent) or $25,000 to $49,999 (25 percent) frequently discussed CAM use with doctors.
"An open dialogue between consumers and their physicians is critical to ensuring safe and appropriate integrated care," said Margaret A. Chesney, Ph.D., NCCAM's Deputy Director. "As the Federal Government's lead agency for scientific research on CAM, NCCAM is especially committed to educating both consumers and health care providers about the importance of discussing the use of CAM and providing evidence-based information to help with health care decision-making."
This telephone survey, administered to a nationally representative group of 1,559 people age 50 or older, revealed some reasons why doctor-patient dialogue is lacking. Respondents most often did not discuss their CAM use with doctors because the physicians never asked (42 percent); they did not know that they should (30 percent); or there was not enough time during the office visit (19 percent). Interestingly, men who had seen a doctor were more likely than women not to have discussed CAM because their doctors never asked (46 percent versus 38 percent).
Other highlights from the survey report include:
Dialogue Topics
* The topics most often discussed with doctors were the effectiveness of a CAM therapy (67 percent); what to use (64 percent); how a CAM therapy might interact with other medications or treatments received (60 percent); advice on whether to pursue a CAM therapy (60 percent); and safety of a CAM therapy (57 percent).
Prescription and Over-the-Counter Medication Use
* Nearly three-fourths of respondents said they take one or more prescription medications; in addition, 59 percent of respondents said they take one or more over-the-counter medications. Twenty percent of respondents reported taking more than five prescription medications.
* The high number of prescription and over-the-counter medications used by this group underscores the need for consumers and physicians to discuss all therapies, including CAM, to ensure safe, integrated care.
View a complete copy of the survey report
Friday, January 12, 2007
Gas Pool Heaters Recalled
The U.S. Consumer Product Safety Commission, in cooperation with Pentair has announced a voluntary recall of the SunSans-Regular MiniMax® NT STD Gas Pool Heater. Consumers should stop using recalled products immediately unless otherwise instructed. According to the government, the pool heaters can emit excessive carbon monoxide (CO), posing a risk of CO poisoning in the event of a vent leak in an indoor installation.
The recall involves Pentair MiniMax® NT STD Gas Pool Heaters installed indoors. They have BTU ratings between 200,000 and 400,000, and use either natural gas or propane. The model number is located on the rating plate on the inner front panel of the heater. The following model numbers are included:
460427 through 460430
460439 through 460450
460531 through 460538
460543 through 460566
The heater identification number is located on the rating plate on the inner panel of the heater, which will show “NT” and “STD” in the third and fourth blocks of the number. The recall includes units with serial numbers 0606002 and lower. The recall also includes units without serial numbers. If the unit has a serial number, it is written on the data plate on the heater, which is located on the inner front door of the heater. Units with serial number 0606003 and higher are not included in this recall. MiniMax® NT Low NOx and MiniMax® NT TSI model pool heaters are not included in this recall.
Consumers should stop using these gas pool heaters installed indoors immediately, and contact the firm to determine if their heater is included in the recall. If it is, Pentair will provide a free inspection, and repair of the heater if necessary. For more information, contact Pentair toll-free at (866)-761-5272 from 9 a.m. to 6 p.m. ET, Monday through Friday.
Wednesday, January 10, 2007
FTC Seeks To Slim Bank Accounts Of Diet Supplement Makers
The United States Federal Trade Commission (FTC) has filed complaints in four separate cases alleging that weight-loss and weight-control claims were not supported by competent and reliable scientific evidence. Marketers of the four products --Xenadrine EFX, CortiSlim, TrimSpa, and One-A-Day WeightSmart -- have settled with the FTC, surrendered cash and other assets worth at least $25 million, and agreed to limit their future advertising claims.
"You won't find weight loss in a bottle of pills that claims it has the latest scientific breakthrough or miracle ingredient," said FTC Chairman Deborah Platt Majoras. "
Paying for fad science is a good way to lose cash, not pounds."
Xenadrine EFXTwo marketers of Xenadrine EFX will pay at least $8 million and as much as $12.8 million to settle FTC allegations that Xenadrine EFX’s weight-loss claims were false and unsubstantiated. The funds will be used for consumer redress. In a bankruptcy case not involving the Commission, the defendants have also agreed to pay at least an additional $22.75 million to settle claims brought by creditors and consumers, including personal injury claims for an earlier ephedra-based product.
Xenadrine EFX, which contains, among other ingredients, green tea extract (EGCG), caffeine, and bitter orange (Citrus aurantium), was advertised heavily in print and on television, including in such publications as People, TV Guide, Cosmopolitan, and Men’s Fitness. Xenadrine EFX advertising also appeared in Spanish-language publications.
The FTC's complaint alleged that the defendants made false or unsubstantiated claims for Xenadrine EFX, including that it was clinically proven to cause rapid and substantial weight loss and clinically proven to be more effective than leading ephedrine-based diet products. According
to the complaint, Robert Chinery commissioned several studies of Xenadrine EFX, none of which showed substantial weight loss. The complaint alleged that in one of these studies, subjects taking Xenadrine EFX lost an average of only 1.5 pounds over the 10-week study, while a control group taking a placebo lost an average of 2.5 pounds over the same period.
The complaint also alleged that Xenadrine EFX advertisements falsely represented that persons appearing in the ads achieved the reported weight loss solely by using Xenadrine EFX. According to the FTC complaint, consumer endorsers lost weight by engaging in rigorous diet and/or exercise programs. In addition, the endorsers were paid from $1,000 to $20,000 in connection with their testimonials; according to the complaint, Xenadrine EFX advertisements failed to disclose those payments.
The stipulated federal court order with Robert Chinery, Jr. and RTC Research & Development, LLC ("RTC") prohibits certain claims regarding Xenadrine EFX and prohibits all claims regarding the health benefits, performance, efficacy, safety, or side effects of any weight-loss product, dietary supplement, food, drug, or device, unless the representation is true, not misleading, and substantiated by competent and reliable scientific evidence. The settlement also prohibits misrepresentations about any test or study. In addition, the order prohibits misrepresentations of the actual experience of any user or endorser and requires clear and prominent disclosure of any relationship that would materially affect the weight or credibility given to a user testimonial or endorsement. Finally, Robert Chinery and RTC cannot use their settlement with the Commission as a basis for seeking a cash refund of Xenadrine EFX-related income taxes that they previously reported as paid.
CortiSlim and CortiStressThe seven marketers of CortiSlim and CortiStress will surrender, in total, assets worth at least $12 million to settle FTC charges that they made false and unsubstantiated claims that their products can cause weight loss and reduce the risk of, or prevent, serious health conditions. In the final three settlement agreements announced today, the FTC will recover $8.4 million in cash, along with proceeds from the sale of a residence acquired with CortiSlim profits. The settlements also require the two individual defendants to liquidate tax shelters and transfer to the Commission any funds that remain after paying taxes and penalties. In two earlier settlement agreements, the defendants turned over $1.5 million in cash, a boat, a truck, a real estate interest, and proceeds from a tax shelter. The funds recovered from the seven defendants will be used for consumer redress.
The advertising campaign for CortiSlim ran nationwide, including ads on broadcast and cable television, radio, print media, and the Internet. The FTC's complaint alleged that advertising claims about CortiSlim’s ability to cause rapid, substantial, and permanent weight loss in all users were false or unsubstantiated, as were claims about CortiStress's ability to reduce the risk of osteoporosis, obesity, diabetes, Alzheimer’s disease, cancer, and cardiovascular disease. The FTC also alleged that CortiSlim and CortiStress infomercials were deceptively formatted to appear as talk shows rather than advertisements.
The final settlements announced today are with Stephen F. Cheng and his company, Window Rock Enterprises, Inc., and with Gregory S. Cynaumon and his company, Infinity Advertising, Inc. All of the settlements bar misrepresentations of any tests or studies and prohibit claims about the performance, effects on weight, or other health benefits of any dietary supplement, food, drug, cosmetic, or device unless the claims are true, not misleading, and substantiated by competent and reliable scientific evidence. The stipulated orders prohibit the use of deceptively formatted television and radio advertisements. In addition, the defendants cannot use their settlement with the Commission as a basis for seeking a cash refund of income taxes that they reported as paid.
TrimSpaThe marketers of TrimSpa will pay $1.5 million to settle FTC allegations that their weight-loss claims were unsubstantiated. According to the FTC’s complaint, the marketers had inadequate scientific evidence to support their advertising claims that TrimSpa causes rapid and substantial weight loss and that one of its ingredients, Hoodia gordonii, enables users to lose substantial amounts of weight by suppressing appetite.
Many ads for “TrimSpa Completely Ephedra Free Formula X32” featured testimonials. Celebrity Anna Nicole Smith claimed to have lost 69 pounds in eight months by using TrimSpa.
Other advertising claims included “Your high speed dream body diet pill” and “It makes losing 30, 50, even 70 pounds (or however many pounds you need to lose) painless.”
TrimSpa ads appeared on television, in magazines, on radio, and in local newspapers. TrimSpa was also promoted on a Web site, at some NASCAR events, and other live events.
The FTC consent agreement requires TrimSpa's marketers – Goen Technologies Corp., Nutramerica Corp., TrimSpa, Inc., and Alexander Szynalski, also known as Alexander Goen – to pay $1.5 million. The agreement also prohibits the marketers from making any claims about the health benefits, performance, efficacy, safety, or side effects of TrimSpa, Hoodia gordonii, or any dietary supplement, food, drug, or health-related service or program, unless the claims are true, not misleading, and substantiated by competent and reliable scientific evidence.
One-A-Day WeightSmartThe Bayer Corporation will pay a $3.2 million civil penalty to settle FTC allegations that advertisements for One-A-Day WeightSmart multivitamins violated an earlier Commission order requiring all health claims for One-A-Day brand vitamins to be supported by competent and reliable scientific evidence.
Bayer ran a national advertising campaign for One-A-Day WeightSmart, which contains EGCG (epigallocatechin gallate), a green tea extract. Bayer also advertised on television, radio, and the Internet, and in newspapers and magazines, such as RedBook, Family Circle, and TV Guide.
Advertising claims included statements such as:
"Just in! Most women over 30 can gain 10 pounds a decade, due in part to slowing metabolism.… So eat right, exercise, and take One-A-Day WeightSmart. The complete multi-vitamin with EGCG to enhance metabolism."
"One-A-Day WeightSmart. The first and only complete multivitamin with an ingredient to enhance your metabolism. EGCG, a natural green tea extract, to help you while you manage your weight."
The complaint alleges that Bayer Corporation marketed One-A-Day WeightSmart with unsubstantiated claims that it
* increases metabolism;
* enhances metabolism through its EGCG content;
* helps prevent some of the weight gain associated with a decline in metabolism in users over age 30; and
* helps users control their weight by enhancing their metabolism.
The FTC alleges that these unsubstantiated claims violate a 1991 Commission order against Bayer’s predecessor, Miles Inc., that require all claims about the benefits of One-A-Day brand products to be substantiated by competent and reliable scientific evidence.
In addition to the $3.2 million civil penalty, Bayer is prohibited from violating the FTC order and from making unsubstantiated representations regarding the benefits, performance, efficacy, safety, or side effects of any dietary supplement, multivitamin, or weight-control product.
The FTC acknowledges the National Advertising Division of the Council of Better Business Bureaus for its referrals of some of these cases.
The Commission vote to accept the Bayer settlement was 5-0. At the Commission’s request, the Department of Justice filed the complaint and proposed consent decree on January 3, 2007, in the U.S. District Court for the District of New Jersey.
The Commission vote to accept the TrimSpa consent agreement, subject to public comment, was 4-0, with Commissioner Rosch recused. The FTC will publish an announcement regarding the agreement in the Federal Register. The agreement will be subject to public comment for 30 days ending February 5, 2007. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC requests that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.
The Commission votes to authorize staff to file the CortiSlim stipulated final orders were both 5-0. The stipulated final orders for permanent injunction were filed in the U.S. District Court for the Central District of California on October 3, 2006 for Stephen Cheng and Window Rock Enterprises, Inc. and on January 3, 2007 for Gregory Cynaumon and Infinity Advertising, Inc.
The Commission vote to authorize staff to file the Xenadrine EFX stipulated final order was 5-0. The stipulated final order for permanent injunction was filed in the U.S. District Court for the District of New Jersey on December 26, 2006.
NOTE: The proposed consent decree and the stipulated final orders are for settlement purposes only and do not constitute admissions by the settling defendants of law violations. They are subject to court approval and have the force of law when signed by the judge. Likewise, the administrative consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent agreement on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Tuesday, January 09, 2007
Radon Kills - How The Government Can Help With Referrals
Each year, nearly 20,000 people die from lung cancer caused by exposure to radon. A common source of exposure to radon that can be avoided is exposure in the home, yet only one in five homeowners has actually tested for radon. January is National Radon Action Month and the U.S. Environmental Protection Agency is urging people to test their homes.
"Healthy homes make for healthy families," said Bill Wehrum, EPA's acting assistant administrator for the Office of Air and Radiation. "EPA is encouraging people to test for radon – a simple step to providing peace of mind."
Radon is an invisible radioactive gas that seeps into your home from underground, and can reach harmful levels if trapped indoors. The only way to know if your home contains high radon levels is to test for it. Nearly 80 percent of American homes have not been tested for radon, even though a simple test costing as little as $25 can help detect a possible radon problem. If radon is found, homeowners should consult with qualified professionals who can reduce radon exposure for a cost similar to many common home improvement repairs. State radon offices can help the public find qualified radon professionals.
"The invisible and odorless nature of radon makes it a real challenge when trying to raise awareness about its public health risk," said acting U.S. Surgeon General Kenneth Moritsugu. "Radon is the second-leading cause of lung cancer in the United States, and it is completely preventable. You can protect your family with a simple first step, and I urge people to take action to prevent radon exposure by testing their homes."
Get your home tested for radon.
Monday, January 08, 2007
DANGER! Generators Now Have New Label Requirements
The U.S. Consumer Product Safety Commission (CPSC) will require manufacturers of portable generators to warn consumers of carbon monoxide (CO) hazards through a new “Danger” label. The label states that, “Using a generator indoors CAN KILL YOU IN MINUTES.”
Manufacturers will be required to place the “Danger” label on all new generators and the generators’ packaging. The label warns consumers that a generator’s exhaust contains carbon monoxide, a poison that cannot be seen and has no odor, and that generators should never be used inside homes or garages, even if doors and windows are open.
The death toll from CO associated with generators has been steadily rising in recent years. At least 64 people died in 2005 from generator-related CO poisoning. Many of the deaths occurred after hurricanes and major storms. CPSC staff is aware through police, medical examiner and news reports of at least 32 CO deaths related to portable generators from October 1 through December 31, 2006.
“These deaths from carbon monoxide poisoning are preventable,” said Acting CPSC Chairman Nancy Nord. “The warning labels are meant to stop consumers before they make what could be a fatal mistake.”
Generators should be used outdoors only, far from windows, doors and vents. The CO produced by one generator is equal to the CO produced by hundreds of running cars. It can incapacitate and kill consumers within minutes.
The new “Danger” label requirements for generators manufactured or imported will take effect 120 days after the regulation is published in the Federal Register.
Sunday, January 07, 2007
California AG Settles With Jackson Hewitt One Year After Also Filing Against H&R Block
News from the tax preparer's front:
California Attorney General Bill Lockyer announced Jackson Hewitt, Inc. will pay $5 million, including
$4 million in consumer restitution, to settle a lawsuit filed by Lockyer that alleged the nation’s second-largest tax preparation firm violated state and federal laws in marketing high-cost refund anticipation loans (RALs) mainly to low-income customers.
“
Jackson Hewitt made a lot of money by pushing customers to take out expensive loans rather than encouraging them to wait a couple of weeks to get their refunds from the IRS for free,” said Lockyer. “In the process they deceived consumers and took money from low-income families who can least afford it.
They even charged people extra for being poor. This settlement benefits consumers by holding Jackson Hewitt accountable for its conduct, prohibiting the unfair practices we targeted in our lawsuit and requiring the firm to conduct itself in a manner that could set the industry standard.”
The settlement requires Jackson Hewitt to pay $4 million in restitution to customers who purchased same-day “Money Now!” loans, “Accelerated Check Refunds (ACR),” and other RAL products that, according to Lockyer’s lawsuit, Jackson Hewitt illegally promoted. The $4 million will provide up to $30 per RAL purchased from 2001 to 2004, up to $15 for each additional financial product bought from Jackson Hewitt, and restitution to consumers victimized by the debt collection scheme. In addition to the restitution, Jackson Hewitt will pay $500,000 in civil penalties and another $500,000 to reimburse the Attorney General’s Office for its investigation costs.
As described in the complaint, RALs are loans provided to taxpayers, secured by their expected tax refund. Internal Revenue Service (IRS) rules prohibit Jackson Hewitt from providing loans itself, so the company contracted with banks for that purpose. But Jackson Hewitt provided clients the loan applications, filled out the applications, sent the applications to the banks, and distributed the loan checks to customers. Jackson Hewitt’s partner banks from 2001-04, the period covered by the lawsuit, were Santa Barbara Bank and Trust (now Pacific Capital Bank) and Household Finance (now HSBC).
In a typical case, Jackson Hewitt’s RAL program worked like this: After calculating a customer’s taxes and determining their refund amount, a Jackson Hewitt tax preparer signed up the customer for a RAL. If the bank approved the application, Jackson Hewitt ultimately provided the customer a check – not for the full tax refund amount, but for the estimated refund, minus various fees Jackson Hewitt charged the customer. Depending on the amount of refund, those fees forced some consumers to pay the equivalent of annual interest exceeding 200 percent.
Additionally, Jackson Hewitt’s marketing of RALs was deceptive in a number of ways, according to the complaint. Advertisements portrayed RALs as refunds or “Money Now,” instead of loans, the complaint alleges, and omitted information that would have informed consumers the products actually were loans. Jackson Hewitt also misled consumers by stating or implying RALs provided a faster way to get money at tax time than waiting to receive a refund from the IRS, according to the complaint. In fact, consumers who filed tax returns electronically could receive a direct deposit refund from the IRS just as quickly as they could get money from Jackson Hewitt through purchasing one of the firm’s high-cost loan products.
Additionally, according to the complaint, Jackson Hewitt violated state and federal law by using or sharing customers’ tax-return information without their written consent. Jackson Hewitt engaged in these illegal practices to market RALs and collect on debts, the complaint alleges.
