H&R Block has become the target of a number of lawsuits alleging wrongdoing. Among them…
California is suing the company, alleging that it has violated state and federal laws in marketing and providing high-cost refund anticipation loans with interest rates exceeding 500%. The laws which H&R Block are alleged to have broken include those regulating debt collection and contracts, false and deceptive advertising, unfair business practice, and the sharing of individuals’ tax return information. The complaint asks the court to pay restitution and fines, which could total hundreds of millions of dollars.
New York has also brought a $250 million suit against the tax preparation giant, alleging that the company improperly marketed money-losing IRAs to its customers. The scheme, according to NY Attorney General Spitzer, has resulted in more fees than interest for 85% of the customers in NY who purchased the IRA.
These lawsuits follow on the heels of a settlement filed in December 2005 to resolve claims in 22 states and the District of Columbia related to the company’s controversial payday loans. The exact terms of the settlement were not disclosed but the company will pay claims to eight million customers who took out payday loans between 1989 and 2005. The lawsuits had alleged that the lending practices for these loans were deceptive, resulting in excessive fees and usurious interest rates.
A similar lawsuit has overcome legal challenges in Chicago, where a federal judge moved that racketeering charges against the tax company could stand. The suit, which started with one plaintiff and has landed in federal court, alleges fees and interest charged to consumers with annual rates of up to 2000%.
And complicating an already questionable fiscal year, the company reported that it had miscalculated its own taxes, resulting in a $32 million liability.
Despite all of the bad news, the company remains optimistic, noting that although their numbers of customers were lower, their higher rates have resulted in a slight revenue increase.
