Predatory practices are practices or services that benefit a business or other entity at the expense of a poorer or less powerful person. They often exploit vulnerable people and perpetuate cycles of poverty.
Common Predatory Practices
High tax preparation fees
No access to free or low-cost banking
High check cashing fees
Other unfair fees and rates
Setting borrowers up for failure
How is This Connected to EITC and Tax Policy?
Research shows that the Earned Income Tax Credit (EITC) provides work, income, educational, and health benefits to its recipients and their children. Recent research indicates the income from these tax credits leads to benefits at virtually every stage of life. In addition, tax credits can be a tool to advance equity.
When families are victims of predatory practices:
- Scarce dollars become scarcer, and families have less money to make ends meet.
- Businesses and other entities gain wealth at the expense of poor people.
- Quality of life issues, including health, living conditions, and opportunities for joy, are negatively impacted.
- A system of inequity becomes more inequitable.
- Helping families recover becomes increasingly expensive.