How can a bank regulator enforce laws that don’t exist?
Imagine for a moment you are pulled over by a state patrolman. As he asks you for your license and registration, he says “I see you’re smoking. That’s bad for you and others in your car. While it may not be illegal, I am going to write you a ticket for reckless driving. And, I’m going to follow you all the way home, and find a way to write you 4 or 5 more tickets until you stop smoking”. The effect? You’re either going to allow him to write you the tickets and go to court, or you’re going to throw away the cigarette.
That’s pretty close to what Refund Loan banks are up against. While bank regulators cannot make laws, the way they enforce existing law allows them to make it almost impossible to offer perfectly legal products.
Who cares, some tax preparers may say. They’re bad products done by predatory lenders. What if the IRS were to say they were going to reject any e-filed return if the fee is over $150? Or, if they didn’t like the fact you always say “NO” to the presidential campaign fund, so they decide to perform due diligence audits throughout tax season. That might make some of us consider writing our congressmen.