Hood et al. v. Santa Barbara Bank & Trust, Jackson Hewitt Tax Service, et al.Santa Barbara Superior Court Case Number 1156354Case Type: Class Action - Consumer Fraud, Unfair Business PracticesStatus: Settlement preliminarily approved by the courtThe Sturdevant Law Firm and the National Consumer Law Center in Boston represent Canieva Hood and a proposed class of individuals who have had their tax refunds seized to pay back alleged debts to other banks. The Congress of California Seniors, a nonprofit organization that supports senior citizens, is also a plaintiff in the lawsuit. Santa Barbara Bank & Trust (SBBT) seized Ms. Hood’s tax refund of over $2,000 after she signed an application for a refund anticipation loan ("RAL") at a Jackson Hewitt Tax Service office. The RAL application offered to all consumers contains a clause permitting SBBT to seize tax refunds to pay back any debts allegedly owed to any lender that makes refund anticipation loans. RALs are high cost, high risk loans secured by a consumer’s anticipated tax refund. SBBT and a handful of other banks have agreements with Jackson Hewitt and other tax preparers to sell RALs to taxpayers. Many RALs are sold to individuals who receive the Earned Income Tax Credit.
The lawsuit alleges that SBBT and Jackson Hewitt are violating California consumer protection laws by seizing consumers’ tax refunds to pay alleged third-party debts and by offering RAL applications containing a hidden clause that purports to allow such seizures.
Ms. Hood seeks to represent a class of consumers who have had their tax refunds seized. She seeks restitution and damages on behalf of the class.
The lawsuit is currently pending in Santa Barbara Superior Court. In May 2005, the trial court granted judgment to SBBT and the other banks on the grounds that the action is barred because of federal law protections of banks. Plaintiffs are currently appealing that decision. Briefing should be completed by the end of Fall 2005.
If you applied fo an RAL and had your tax refund seized to pay a debt owed to another bank, please contact Whitney Huston for further information at 415-477-2410.
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