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Mo' Trouble for Mo' Money

Adam Rust's picture

Posted December 5, 2012

Mo' Money Taxes, along with partner subsidiaries and their owners, face a lawsuit from the Illinois Attorney General which could lead to their corporate extinction, owing to alleged practices at the company which were unfair and deceptive.

Lisa Madigan, the AG of Illinois, contends that Mo' Money Taxes ("MMT") and its related entities (Money

Co. USA, Simple Taxes, LLC; Global America Management, LLC; Markey Granberry; Derrick Robinson; and Rodney Williams) committed violations of Illinois law at their offices in and around Chicago and East St. Louis.

In this Mo'Money Taxes advertisement, the company makes a claim to differentiate their preparation from "the other guys" on the grounds that whereas their rivals will fail to deliver with a next-day refund, Mo'Money would always have it when promised. You may find some humor with the Madea-inspired protagonist.

This video shows angry Norfolk customers outside of a closed Mo'Money Taxes in Nor that Mo'Money did not have their refunds.

Unauthorized preparation and filing of tax returns:

Mo'Money used refund anticipation loans as bait to ensnare consumers into very high-cost tax prep services. According to Madigan, when MoneyCo USA stores took applications for refund anticipation loans, they took social security numbers of applicants as well as their dependents and income information from pay stubs. Told that they would have an answer in 24 hours, all but a few consumers were ultimately turned down for their loans.

However, in the process of filing that application, Mo' Money forced their tax prep services onto customers. This excerpt is taken from language in the application contract:

"Also, I understand that 1 of the qualifications of trying the money on the spot program is to allow MoMoneyTaxes [sic] the first right or [sic] refusal to prepare and electronically file my 2011 income taxes."

Their efforts to force RAL applicants to buy Mo'Money's tax prep service lead to the second complaint - that their services cost too much.

Undisclosed and exorbitant preparation, filing, and processing fees.

The filing says that MMT charged between $480 and $550 for preparing a return as well as additional fees of approximately $178 for processing - meaning that consumers were typically charged as much as $700 in total. If you put those numbers in the context of the kind of applicants normally served by MMT, then the picture becomes truly shocking. Very few MMT customers itemize, most have only a W-2, and few have any business or investment income. In reality, most of their customers have only one complication with their return - they need to fill out a Schedule EIC. In all likelihood, an experienced employee could probably do all of the work in fifteen minutes. Indeed, even the prices quoted in their false advertising are probably well beyond the appropriate point to generate a fair profit.

Let's break out those fees:

  • Price of a 1040 form: $150
  • Fee to file federal taxes electronically: $250
  • Fee to file state taxes electronically: $80
  • Service bureau fee for those returns that include a request for a bank product: $99

The bait-and-switch worked because those fees were not disclosed until consumers received their refunds. The court document indicates that many consumers demanded a refund at that point in time, but that MMT has not yet provided any refunds to those individuals.

The story of Ariel Crosby

Madigan illustrated the work of Mo'Money through the stories of four individuals living on the South Side of Chicago. The story of Ariel Crosby includes most of the elements o f the various reports. Crosby first engaged with MMT in December 2011 when, upon hearing a WGCI radio advertisement, she applied for a "Money on the Spot" refund anticipation loan. An employee at the store told Crosby that in order to qualify, she would need to provide social security cards for herself and her dependents as well as a recent pay stub. As mentioned earlier, the process of applying also meant that Crosby had to sign the First Right or Refusal contract. Crosby never received any disclosures relating to pricing for the loan as well as preparation. Crosby applied and thirty minutes later she was denied for the loan. At that point, Crosby told the employee that she no longer wanted to work with Mo'Money and asked to have all of the photocopies with her private information to be shredded.

The next month, Crosby went to a different company to file her 2011 returns. By this time, she had her w-2 and a statement of unemployment benefits.Unfortunately, the new preparer could not file for her - because the IRS reported that Crosby's return had already been filed.

Wise to the likely actor, Crosby immediately filed an identity theft complaint against Mo' Money with the IRS. Crosby tried to reach Mo'Money through the contact numbers on the company's web site, but all were disconnected. She walked into the store and was told that a manager would call her shortly. When he did, he apologized for her troubles and said that MMT filed her return "by mistake."

It is worth noting that the same mistake occurred with each of the other customer stories, each of whom filed at a different store.

The employee promised that Mo'Money would have a tax refund for her soon. He promised to have the refund waiting for her at the store.

At this point, the Mo' Money Store closed. Crosby was told that her refund would arrive at her home through FedEx. He had no tracking id for that shipment.

In early February, still lacking a refund, Crosby called Mo'Money. She identified herself by her private information. This was the information that she had requested to be destroyed. Mo'Money still had her information and was able to tell her that the IRS had issued a refund to the processor which would then be available to her within five to seven days.

As of October 26th, 2012, Crosby has not yet received her refund.

Thanks to Chi Chi Wu of the National Consumer Law Center for the copy of the complaint.