Consumer groups ask federal bank regulator to keep banks out of the business of abusive and high-priced “paystub” and holiday RALs

Refund anticipation loans (RALs) are made by tax preparers and banks prior to the tax filing season and before taxpayers have received their IRS Form W-2s. Since a taxpayer cannot file a tax return without a W-2, pay stub RALs are made based upon an estimated tax refund calculated from the consumer’s most recent pay stub.