Office of the Commissioner of Financial Regulation


Beware of High-Cost "Economic Stimulus Payment" Anticipation Loans - Advisory Notices


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March 10, 2008

The U.S. Treasury will begin sending Economic Stimulus Payments to more than 130 million households in May, 2008. These Payments will be made to eligible persons who filed a 2007 federal tax return. According to the IRS, eligible persons will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17.

BEWARE OF HIGH-COST ANTICIPATION LOANS. You may be enticed through advertisements, direct solicitation, or other ways, to take out an Economic Stimulus Payment anticipation loan. These are short-term loans offered by tax preparers, associated lenders and others that typically come at a very high price.

BEFORE YOU BORROW, CONSIDER THE TERMS OF THE LOAN. An Economic Stimulus Payment anticipation loan is similar to a tax rebate anticipation loan in that it may come with a high interest rate resulting in an unreasonably high loan cost. You may pay hundreds of dollars, or more, just for receiving an amount equal to your anticipated Economic Stimulus Payment slightly earlier than you would receive the Payment anyway. These loans are secured by the Economic Stimulus Payments, which will go directly to the lender. If for some reason you don't receive an Economic Stimulus Payment in the amount you anticipate, the loan may cost you much more than you initially expect because you may have to pay it off over a longer period of time.

YOU CAN SPEED UP YOUR PAYMENT BY ARRANGING FOR DIRECT DEPOSIT. According to the IRS, Economic Stimulus Payments will be direct deposited for persons who select that option when filing their 2007 tax returns. Taxpayers who already filed and requested direct deposit won't need to do anything else to receive the stimulus payment. Taxpayers who did not request direct deposit for their 2007 refund will receive a paper check by mail. The IRS reminds taxpayers who haven't filed their 2007 returns yet that direct deposit is the fastest way to get both regular refunds and stimulus payments.

VISIT THE IRS WEBSITE. The IRS has made important additional information regarding Economic Stimulus Payments available at its Economic Stimulus Payments Information Center located on its website. This includes warnings about e-mail, telephone, and other scams.

REMEMBER, IT'S YOUR MONEY. The money you will be paid by the federal government through your Economic Stimulus Payment is yours. Be smart. Avoid high-cost Economic Stimulus Payment anticipation loans.