On one of the streets where I walk in the mornings, H&R Block turned a vacant storefront into a large tax preparation center in something like three weeks. I walked past the place at about 10:00 a.m. on January 2, and saw that there must have been 25 people already waiting to have their 2002 income tax returns prepared.

I can only assume that they were there to get what H&R Block refers to as “Instant Money.” The advertisement says, in large print, “Walk in with your taxes. Walk out with Instant Money.” In only slightly smaller print, the customer is advised, “Instant Money. Why wait for your refund?” The customer doesn’t even have to worry about paying H&R Block that day for preparing and filing his tax return, because H&R Block will happily deduct it from the customer’s estimated refund.

I wonder how many people showing up for their Instant Money realize that what they are actually getting is a loan against an anticipated tax refund — a loan that may come with a very hefty interest rate. It turns out that H&R Block does not actually make the loans, but rather it teams up with Imperial Capital Bank, and bank actually makes the loans. The bank is chartered in Delaware, where there apparently is no cap on interest rates.

Last year, Edmund Mierzwinski, consumer-director of the U.S. Public Interest Research Group, stated, “All consumer advocates [e.g. here] consider these refund anticipation loans to be predatory.” The same article reported that H&R Block has gotten into legal soup over the years for failing to fully disclose that the loans may be very expensive. To this, an H&R Block spokesperson responded, “.”We think we do a very good job of making clear to our clients that, when they get a refund anticipation loan, it is just that — a loan.”

True, H&R Block’s ad does tell the customer in the “How it Works” Section of the ad, that “while you are there [having your tax return prepared], you can apply for a refund loan of up to $5,000,” and further states, “If you qualify, you’ll get your money on the spot.” However, if the customer wants to know who is making the loan and what the interest on the loan is, he is relegated to the fine print. There, those customers with good eyesight and the skills necessary to understand language carefully crafted by H&R Block’s attorneys are advised that a bank will actually be making the loan, that the bank determines what the interest will be, and that the customer will be advised of the interest rate and other fees either on a separate disclosure statement, or on the loan check stub.

You can bet the ranch that the separate disclosure statement referred to will only be provided in those states that specifically require it, and, even then, it will most certainly be about as clear as mud to the average Instant Money seeker. And, the practice of “disclosing” the terms of a loan on the stub of the check representing the proceeds of the loan is beneath contempt.

What is really sad is that H&R Block is preying on those who are most vulnerable – those who are likely filing low-income returns, who are living from paycheck to paycheck, and who probably need the money right away to make ends meet. I suspect there are even some people who need the money right away in anticipation of receiving credit card bills for holiday purchases, a factor, which doubtless did not escape notice by the H&R Block folks.

Maybe some day — hopefully soon — the IRS will figure out a way to handle electronically filed, low income returns rapidly enough to issue same-day refunds to those who truly need Instant Money.