Schear Lending claims to be the leading non-bank provider of small dollar consumer credit in the country, making over $8.5 billion in consumer loans to more than 15.8 million customers. The company seems to be related to Schear Financial Services, which is headed by Lee Schear. Lee Schear founded Cashland, the payday loan store, and is the President of NCP Finance, which promotes the “credit services organization” model of payday lending. Among NCP Finance’s clients are payday lenders ACE Cash Express, CashAmerica, Check ‘N Go, and Advance America.
While it appears that a few non-bank lenders, such as Schear Lending and SGS Credit Services, see Section II.C above, are making RALs, these loans will most likely not be as widespread as bank RALs. Nonbank lenders do not have the legal ability, unlike banks, to flout state laws that cap interest rates, i.e., usury laws. Tax-time loans from payday lenders and other storefront outlets that offer to prepare taxes and make loans may be subject to state loan laws, usury caps, or loan broker requirements in states that have them. Seventeen states (and District of Columbia) do not authorize extremely high-cost payday lending at all.
As RALs disappeared from the tax season, providers of professional tax preparation software are promoting non-loan methods of delivering tax refunds to consumers. A scan of websites in mid- found heavy emphasis on refunds delivered via prepaid debit cards and direct deposit to taxpayers’ accounts.
Under the incentive model, the QIK Fund product costs $44 and preparers can earn up to $14 in rebates per funded bank product
Drake Software’s website still offers a RAL option, and lists Republic Bank Tax Refund Solutions as one of its “banking partners.” Drake also offers a “Direct Deposit Check” (DDC), how to get a payday loan in Tennessee which appears to be a RAC. Drake’s other banking partners include AdventFinancial, EPS Financial, River City Bank, and Santa Barbara Tax Products Group. Taxpayers who select the SBTPG’s Refund Transfer can receive their funds by direct deposit into their own accounts, in the form of a cashier’s check printed by the tax preparer through Drake’s software, or via a pre-paid card, the Diamond Plus Card. The Diamond Plus Card is issued by First California Bank.
TaxWise lists Santa Barbara Tax Products Group, Refund Advantage, Republic Bank, River City, Advent Financial, and 3Fund as its bank product options
Its website still offers RALs, as well as electronic refund checks (RACs) and a Direct Deposit Refund (RACs) with no checks to print.
One of the products offered by TaxWise is the 3Fund payment solution. 3Fund permits the preparer to deduct tax preparation fees from the tax refund which can then be delivered either on a prepaid debit card, by a printed check, or via direct deposit for a cost of $ or more to the taxpayer. CCH Small Firm Services (SFS) announced the 3Fund feature in and provides this option for both ATX and TaxWise software products. CCH SFS also permits preparers who use the TaxWise and ATX software programs to offer taxpayers the reloadable prepaid Western Union MoneyWise MasterCard. The Western Union prepaid card is issued by MetaBank. For returns where no bank product is selected, TaxWise offers FeeCollect, which costs $15.
NTS Services Corp., makers of Tax Vision software, offers QIK Funds, a RAC that is offered by New Capital Bank (NCB) and Citizens Bank (which offers the Atlas system). NTS offers two models to tax preparers: the “low cost” model and the “incentive” model. The low-cost model offers a RAC, called a federal QIK Fund, at $30, with the state refund an additional $13. The preparer receives rebates based on volume, and refunds are disbursed minus fees using direct deposit or paper checks. The incentive model appears to offer the same products, just a different pricing structure. The incentive model permits an “upcharge” of the Refund Account Fee up to $75. The additional charge appears to be added to the RAC fee paid by the consumer, and then kicked back to the preparer.