New Jersey Court Adopts Prof. Peterson's Tax Refund Advertising Best Practices Recommendations

A New Jersey court issued a final order endorsing a best practices list offered by Christopher Peterson, a professor of law at the S.J. Quinney College of Law, in the advertising of tax refund preparation services to consumers. The opinion followed hotly contested litigation brought by the New Jersey Attorney General’s office against the Malqui Financial Group, a regional income tax return preparation chain.

New Jersey Superior Court Judge Thomas P. Olivieri ruled that the tax preparation chain was liable for hundreds of violations of New Jersey false advertising laws in connection with their income tax return preparation businesses. Professor Peterson was retained by the State of New Jersey to act as an expert witness and consultant in the litigation.

In awarding the state $1.86 million in penalties and ordering $1.64 million in restitution to consumers, the New Jersey court also adopted a list of restrictions on misleading advertising submitted by Professor Peterson. The court found that income tax preparation chain had falsely described their services as income tax refunds, when in fact the company brokered high cost loans with triple digit interest rates. The court also found that the tax return preparer had targeted Spanish speaking consumers with deceptive advertisements designed to capture tax refunds owed to recent immigrants.

In his colloquy announcing the decision, Judge Olivieri explained, “I think that these best practices that the state has laid out and has been endorsed by Professor Christopher Peterson are appropriate regarding any other entity [that provides tax return preparation.]”

The Court found that the Malqui Financial Group and its related companies targeted consumers eligible for the Earned Income Tax Credit, the federal government’s largest anti-poverty program. “This tax credit was meant to help raise low income kids out of poverty, not to line the pockets finance companies,” explained Peterson. “Particularly at this time of year, it’s good to see a court taking a stand against deceptive and overpriced consumer financial services associated with income tax returns.”