Rapid Refund Racket
In 2005, the annualized interest rate for a rapid refund loan covering the average income tax refund was estimated at 178%; $100 in addition to the average $146 cost of tax preparation.
Predatory lending practices, which increased with the collapse of the subprime mortgage market, disproprortionately target Native American communities and other vulnerable populations. This report provides an overview of the predatory lending practices that have had a harmful impact on Native people and highlights the efforts of five Native Nations to fight this growing problem.
Across the United States, more than twice as many Native Americans as whites obtain home mortgages on the subprime market.
In 2005, the annualized interest rate for a rapid refund loan covering the average income tax refund was estimated at 178%; $100 in addition to the average $146 cost of tax preparation.
Nearly three out of four tribal housing professionals indicated that predatory lending was at least somewhat of a problem in their communities; more than one in three named loans against tax refunds and payday loans a big problem.
Native Americans have long been a prime target of unscrupulous predatory lenders who promise quick, easy access to cash in exchange for interest and fees that keep borrowers in a spiral of debt. In response to this growing problem, five Native Nations have developed innovative, replicable strategies based on financial education, alternative financial products and services, and asset-building programs and approaches to help their citizens get out of the dangerous cycle of debt and gain financial stability.
