By: Billy Beerslugger
Recently I’ve seen both Magic Johnson and Russell Simmons promoting various products and companies on commercials. Magic Johnson is promoting a “Money Now Loan” for tax service Jackson Hewitt which is essentially a loan against your tax refund. Russell Simmons (founder of Def Jam) is promoting the “Rush Card” which is billed as a pre-paid credit card but actually amounts to a debit card.
Whats is surprising in both instances is that both services/products are either unnecessary or detrimental to the communities that they champion, lower income people of color.
Where the Magic Happens: There is coming legislation in the government on so called “Predatory Loans” which are short-term and high-cost. In this category are “Payday Loans” which is an advance on your paycheck and these tax-refund loans. In Magic Johnson’ s case he is advocating to get an advance on your tax refund. Seems harmless enough, I mean it’s Magic Johnson, one of the most stand up black guys of all time, he’s got HIV for Christ Sakes why would he be giving you a raw deal? What the people who use this service fail to recognize is that annual interest rates on these types of loans can range from 50% to nearly 500% (Jackson Hewitt charges Jackson Hewitt charges fees with an APR of either 134% or 140%.). This scam is even better than the “Payday Loans” because they are backed by the Federal Tax refund they just did for the victim client. Basically Jackson Hewitt is going to get their money. And you will never guess who these loans are targeted to. Yep upper class white people. Nah, (JK : just kidding), Magic Johnson appears in television ads, radio spots on urban stations and billboards in lower income communities.
I think the best part about the whole thing is that Jackson Hewitt’s website offers a 20 percent discount for customers who order Johnson’s book, 32 Ways to be a Champion in Business.
Here’s an excerpt from the book:
Chapter 3: Use your reputation as a person of high moral fiber to take advantage of people who don’t know any better. The more you pretend to be helping these people the more they will believe you and the more money you will get. In addition to taking advantage of them, get them to buy your book about how you’re such a good business person. To increase book sales couple the purchase of the book with a discount on one of the unscrupulous services you endorse.
(Yea I went there, unscrupulous, look it up bitches. And no a Thesaurus is not a Dinosaur as I recently found out.)
I digress, back to the story. The IRS states that about 8.7 million people took out these tax refund loans last year resulting in about 1 billion dollars in fees. Around 5.8 million of these people are recipients of the Earned Income Tax Credit (EITC) which helps people with low incomes and is the govenments most effective anti-poverty program. Consumer advocates estimate that about $523 million was drained from the EITC program by refund anticipation loan fees in 2007.
Jackson Hewitt has been the target of several government lawsuits for its abusive practices. In 2007, the California Attorney General won a $5 million settlement from the company for violating state and federal laws in marketing its tax refund loans to low income customers.
So not only are Magic and Jackson Hewitt fucking these low income people in the ass, they are fucking the American taxpayers who are supplementing these low income people in the ass. I just hope Magic is wearing a condom.
Russell Simmons, Entreponinja:
Russell Simmons makes money on everything. He’s a true mogul in every sense of the word. Def Jam, Phat Farm Clothing line among other ventures. Russell in the past couple years has been touting the “Rush Card”. It’s a prepaid debit card for people with bad credit touted as a tool to financial empowerment. These cards have an activation fee of $19.95 and a $1.95 ATM withdraw fee (in addition to the actual ATM fees) among other fees. As far as I can tell there is no interest applied to purchases which is better than other prepaid credit cards. I guess one selling point is that it is free to cash checks which most people without checking account will have to pay to get their checks cashed at a check cashing place.
What I don’t get is that people can just go to the bank and get a debit card for free. Just because you have bad credit does not mean you will be denied a checking account. Having delinquent checks may preclude you from acquiring a checking account though. If that’s the case I would suggest Russell Simmons go on TV and tell people to make good on those bounced checks instead of making money off of them. If you’re really trying to empower the low income and African American community tell them the truth. The truth is they don’t need this card. They need to get a checking account and a debit card that’s free.
However, I guess you can’t really hate on these guys, America was built on screwing over the little people. They’re just two more in a long line that has sold out for a buck.