Dear Mr. Johnson,
I wrote a column where I discussed your inexplicable decision to serve a spokesperson for Jackson Hewitt’s tax refund loan program.
It’s called Money Now.
Some celebrities know much about the products that they endorse.
Pat Boone had to pay up, after he signed a consent order with the Federal Trade Commission. He did commercials for Acne-Statin. Acne-Station was supposed to clear up skin blemishes but didn’t.
Mr Johnson, you don’t seem like the kind of guy whose ever needed a tax refund loan.
Let me tell you how they work.
Tax refund loans (also called refund anticipation loans) are financial products marketed primarily to poor people.
They are described as a payday loan guaranteed by your tax return.
Like payday loans, the fees and interest rates on tax refund loans are outrageous.
According to IRS data, 8.7 million people took out a tax refund loan in 2007. Of those 8.7 million who got the loans, 67% received an Earned Income Tax Credit.
The Earned Income Tax Credit is a program aimed to help the working poor. Only 17% of all taxpayers get it.
The product you are pitching is aimed at the poorest segment of America. Your ads are most frequently seen in poor, urban areas.
I doubt your nearby neighbors have seen the ads.
Thus, you can maintain your “nice guy” brand to a larger world while exploiting poor people.
Who is the real Magic Johnson? The friendly guy who raises money for charities or the guy who encourages people to get high interest loans they don’t need?
I hope that when you meet your maker you can “sell” your explanation to the people at the pearly gates.
You say in your commercials that Jackson Hewitt is “a partner and a pal.”
You might need a pal at that moment.
After I wrote the column, I received a barrage of responses. Not one single person defended your actions. Not one.
It’s a historic moment when 100% of Americans agree on something. We are all outraged.
Many were angry and suggested you “sold out” to make some quick dollars. Others suggested you missed the limelight and figured that being in a cheesy commercial was the best way to get some attention.
They figured that the tax refund business was the best gig you could get.
Maybe they are right.
The most interesting responses came from people who worked in tax refund loan offices. They said many people insisted on a loan because they saw your commercials.
You obviously have sway with a lot of people. You are using that sway to get them to do something that hurts them.
A refund anticipation loan is the worst kind of rip off. People can normally get a tax refund, without any kind of fees or interest payments two weeks after they file their return.
They don’t need “a partner and a pal.”
A banker gave me a really fascinating tidbit.
Since people who received tax refund loans do not have established bank accounts or good credit, banks routinely put a 10 day hold on checks from tax refund loan companies.
Not only are people paying outrageous fees, they don’t get any benefit from it. They don’t get the money any quicker than they would without the loan.
I’m starting to wonder what kind of “partner and pal” you really are.
Since I have been investigating tax refund loans, I wasn’t stunned to see scummy behavior. Exploiting the poor is commonplace. Big corporations have taken the business model away from the loan sharks.
The poor don’t have high paid lobbyists.
I am sure that other celebrities pitch exploitative products. However, you are more than a celebrity. You have been a role model for over 30 years. You come across as someone who does the right thing.
There is only one right thing to do: Quit doing the commercials.
Atone for your behavior and move on.
Then I will start to think of you as “a partner and a pal.”
Your former admirer,
Previous Huffington Post Column on the topic: Magic Johnson and the Tax Refund Rip Off.
Don McNay, CLU, ChFC, MSFS, CSSC is the founder of McNay Settlement Group in Richmond, Kentucky.
He is the author of Son of a Son of a Gambler: Winners, Losers and What to Do When You When The Lottery. You can write to Don at email@example.com or read his award winning, syndicated column at www.donmcnay.com.
McNay is Treasurer for the National Society of Newspaper Columnists and a lifetime member of the Million Dollar Round Table.
Read more: Checking Account, Michigan State Spartans, Magic Johnson, Irs, Earned Income Tax Credit, Loan Sharks, California Attorney General, Internal Revenue Service, Michigan State University, Eitc, 2009 Ncaa Tournament, Ncaa, Don McNay, Payday Loans, Basketball, Dream Team, Los Angeles, College Basketball, Mcdonalds, Working Poor, Los Angeles Lakers, Check-Cashing-Store, Jackson Hewitt, Tax Refunds, Banking, Refund-Anticipation-Loans, Louisville, Kentucky, Lexington KY, Nba, Personal Finance, Business News