Title 6.2. Financial Institutions and Services
Subtitle IV. Other Financial Activities
Chapter 25. Refund Anticipation Loans
Chapter 25. Refund Anticipation Loans.
§ 6.2-2500. Definitions.As used in this chapter, unless the context requires a different meaning:
"Applicant" means a customer who applies for a refund anticipation loan through a facilitator.
"Borrower" means an applicant who receives a refund anticipation loan through a facilitator.
"Customer" means an individual for whom tax preparation services are performed.
"Facilitator" means a person who receives or accepts for delivery an application for a refund anticipation loan, delivers a check in payment of refund anticipation loan proceeds, or in any other manner acts to allow the making of a refund anticipation loan. "Facilitator" does not include a bank, thrift, savings association, industrial bank, or credit union, operating under the laws of the United States or the Commonwealth, an affiliate that is a servicer for such an entity, or any person who acts solely as an intermediary and does not deal with an applicant in the making of the refund anticipation loan.
"Refund anticipation loan" means a loan, whether provided through a facilitator or by another entity such as a financial institution, in anticipation of, and whose payment is secured by, a customer's federal or state income tax refund or by both.
"Refund anticipation loan fee" means any fee, charge, or other consideration imposed by a lender or a facilitator for a refund anticipation loan. The term does not include any fee, charge, or other consideration usually imposed by a facilitator in the ordinary course of business for nonloan services, such as fees for preparing tax returns and fees for the electronic filing of tax returns.
"Refund anticipation loan fee schedule" means a list or table of refund anticipation loan fees that (i) includes three or more representative refund anticipation loan amounts; (ii) lists separately each fee or charge imposed, as well as a total of all fees imposed, related to the making of a refund anticipation loan; and (iii) includes, for each representative loan amount, the estimated annual percentage rate calculated under the guidelines established by the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.).
"Tax return" means a return, declaration, statement, refund claim, or other document required to be made or filed in connection with state or federal income taxes.
A. Any facilitator who advertises the availability of a refund anticipation loan shall not directly or indirectly represent the loan as a customer's actual refund. Any advertisement that mentions a refund anticipation loan shall state conspicuously that it is a loan and that a fee or interest will be charged by the lending institution. The advertisement shall also disclose the name of the lending institution.
B. Every facilitator who offers to facilitate, or who facilitates, a refund anticipation loan to a customer shall post a refund anticipation loan fee schedule showing the current fees for refund anticipation loans facilitated at the office, for the electronic filing of a customer's tax return, for setting up a refund account, and any other related activities necessary to receive a refund anticipation loan. The refund anticipation loan fee schedule also shall include a statement indicating that a customer may have the tax return filed electronically without also obtaining a refund anticipation loan.
C. The refund anticipation loan fee schedule required by subsection B shall be made in not less than 28-point type on a document measuring not less than 16 inches by 20 inches. The postings required in this section shall be displayed in a prominent location at each office where any facilitator is offering to facilitate or is facilitating a refund anticipation loan.
D. Prior to an applicant completing a refund anticipation loan application, a facilitator that offers to facilitate a refund anticipation loan shall provide to the applicant a disclosure clearly setting forth the following:
1. The refund anticipation loan fee schedule;
2. That a refund anticipation loan is a loan and is not the applicant's actual income tax refund;
3. That a customer can file an income tax return electronically without applying for a refund anticipation loan;
4. The average amount of time, according to the Internal Revenue Service, within which a customer who does not obtain a refund anticipation loan can expect to receive a refund if a customer's return is filed or mailed as follows:
a. Filed electronically and the refund is deposited directly into a customer's bank account or mailed to a customer; and
b. Mailed to the Internal Revenue Service and the refund is deposited directly into a customer's bank account or mailed to a customer;
5. That the Internal Revenue Service does not guarantee that it will pay the full amount of the anticipated refund and it does not guarantee a specific date that a refund will be deposited into a customer's bank account or mailed to a customer;
6. That the borrower is responsible for the repayment of the refund anticipation loan and the related fees in the event that the tax refund is not paid or not paid in full;
7. The estimated time within which the loan proceeds will be disbursed to the borrower if the loan is approved; and
8. The fee that will be charged, if any, if the applicant's loan is not approved.
E. Prior to consummating a refund anticipation loan transaction, a facilitator shall provide to the applicant, in either written or electronic form, the following:
1. The estimated total fees for obtaining the refund anticipation loan;
2. The estimated annual percentage rate for the applicant's refund anticipation loan, using the guidelines established under the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.); and
3. The various costs, fees, and finance charges, if applicable, associated with receiving a refund by mail or by direct deposit directly from the Internal Revenue Service, a refund anticipation loan, a refund anticipation check, or any other refund settlement options facilitated by the facilitator.
F. When an application involves more than one applicant, a disclosure pursuant to this section need only be given to one of the applicants applying for the refund anticipation loan.
Any facilitator who offers to facilitate, or who facilitates, a refund anticipation loan shall not:
1. Require a customer to enter into a loan arrangement in order to complete a tax return;
2. Misrepresent a material factor or condition of a refund anticipation loan;
3. Fail to process the application for a refund anticipation loan promptly after an applicant applies for the loan; or
4. Engage in any transaction, practice, or course of business that operates a fraud upon any person in connection with a refund anticipation loan.
A borrower who obtains a refund anticipation loan may rescind the loan, on or before the close of business on the next day of business, by either returning the original check issued for the loan or providing the amount of the loan in cash to the lender or the facilitator. The facilitator may not charge the borrower a fee for rescinding the loan or a refund anticipation loan fee if the loan is rescinded but may charge the customer a fee for establishing and administering a bank account to electronically receive and distribute the refund.
This chapter shall preempt and be exclusive of all ordinances of any locality relating to refund anticipation loans. This section shall be given retroactive and prospective effect.
Any violation of the provisions of this chapter shall constitute a prohibited practice under the provisions of § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).