I am offended by the current ad campaign of Jackson Hewitt, a tax preparation service. I am not opposed to financial incentives, when they make sense. But this incentive seems squishy. [I should say at the outset that our PR firm has no axe to grind in this arena.]

The Jackson-Hewitt campaign encourages consumers to use their service because they can get you a Refund Anticipation Loan (RAL) in as little time as one day. They contrast that with the Refund Anticipation Check (RAC) that you can get through their competitors at H&R Block in “as much as 15 days.”

Both the RAL and the RAC (two particularly ugly-sounding acronyms) stem from a pretty sound premise. The firms that prepare your taxes are professionals so, if they say you’re going to get a refund, the odds are pretty good that you will. The RAC and the RAL just help you get it quicker, but there the similarity stops.

Your RAC check, delivered on an H&R Block Mastercard, by direct deposit or mail, comes from the federal government. The RAL comes from the Republic Bank & Trust Company, to which Jackson Hewitt has forwarded your paperwork. Republic is not providing a public service here – they’re earning interest on a very low risk loan, which decreases the refund amount.

Here’s what I think are the problems. First, the idea that the person who prepares your tax return can help you get a loan smacks of potential conflict of interest. If the preparer doesn’t put you in line for the loan, do you shop your tax return elsewhere? Or does the preparer fudge things a little to make sure you get the refund? Didn’t we just have some major financial problems because people gave mortgages (loans) to people who didn’t deserve them?

Second, what is Jackson-Hewitt getting out of this from Republic Bank? They’re providing a loan stream, so it must be something. When I emailed Jackson-Hewitt with that question on January 31, I was told I should receive a response “within the next business day.” I’m still waiting.

Third, as a marketer, I’m offended that a national firm such as Jackson-Hewitt would make “quick loans” its differentiator as opposed to some aspect of the professionalism of its people.

Looking for other opinions, I googled “refund anticipation loans” and learned the following from  “It’s a low risk loan – but you pay as if you were betting the farm. You generally pay a processing fee, as well as interest on the loan … you’re better off for avoiding refund anticipation loan fees.”

Wouldn’t it have been better for Jackson-Hewitt to advise its clients that way?

To reach John:

Phone:  212.840.0444
LinkedIn:  John Bliss