Jerry Brown Prohibits H&R Block From Marketing “Early Tax Refunds”

Oh snap! Just in time for tax season, California Attorney General Jerry Brown’s 2006 lawsuit against H&R Block has borne some fruit. He just reached agreement prohibiting deceptive marketing of tax refund loans:

“The settlement provides for up to $2.45 million in restitution for consumers who purchased a “Refund Anticipation Loan” or a “Refund Anticipation Check” through H&R Block between January 1, 2001 and December 31, 2008. In addition, H&R Block will pay $500,000 in penalties and $1.9 million in fees and costs.”

Will the “settlement administrator” be contacting you about getting some money from H&R? Read on for details.

California’s dogged AG:

via “Thomas Hawk’s” Photostream

Attorney General Brown Reaches Agreement with H&R Block Prohibiting Deceptive Marketing of Tax Refund Loans

Sacramento—Attorney General Edmund G. Brown Jr. today reached a $4.85 million settlement with H&R Block, which prohibits the company from marketing refund anticipation loans as early tax refunds.

This settlement prevents H&R Block from marketing high-cost loans as early tax refunds,” Attorney General Brown said. “This is especially important because often these loans go to those who can least afford them.”

Attorney General Brown filed suit against H&R Block in early 2006 regarding its marketing and sale of income tax refund anticipation loans and a related product called refund anticipation checks.

H&R Block continues to deny any wrongdoing. During the course of the investigation, Block has worked with the Attorney General to improve its practices.

A refund anticipation loan is a short-term loan secured by a taxpayer’s anticipated income tax refund. The complaint alleged a variety of deceptive practices by H&R Block including:

Deceptive advertising designed to disguise refund anticipation loans, which carry fees and other costs, as tax refunds, which the IRS provides without charge; and

Unfair debt collection practices by which customers’ refund proceeds were garnished to pay off debts they supposedly owed.

The settlement provides for up to $2.45 million in restitution for consumers who purchased a
“Refund Anticipation Loan” or a “Refund Anticipation Check” through H&R Block between
January 1, 2001 and December 31, 2008. In addition, H&R Block will pay $500,000 in penalties and $1.9 million in fees and costs.

In addition. H&R Block will be prohibited from marketing these loans and related products in a deceptive or misleading manner and will be required to make clear and conspicuous disclosures to consumers prior to their purchase of these products. Terms of the settlement are limited to three years.

A settlement administrator will be contacting eligible consumers directly. Eligible consumers may also write to the Attorney General’s Public Inquiry Unit at P.O. Box 944255, Sacramento, CA 94244-2550, or may send an e-mail at http://ag.ca.gov/contact/.

Attorney General Brown previously settled claims against Jackson Hewitt and recently concluded a trial against Liberty Tax Service, the second and third largest tax preparation companies in the country, respectively. All three lawsuits involved refund anticipation loans and related products.

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2 Responses to “Jerry Brown Prohibits H&R Block From Marketing “Early Tax Refunds””

  1. Wendy Waits says:

    I am a tax preparer for H&R Block and we always disclose our refund anticipation loans and refund anticipation checks as honestly as we can. The application forms are clearly labeled as Loan or CHECK. The fees are printed in a large, bold font and we explain each charge before we continue with the process. Many people choose the high interest, refund loans even when they are fully aware of the charges.

  2. Julie Leggio says:

    I also work for H&R Block. I explain all the fees from the least expensive to the most expensive option. I always encourage the client to choose the least expensive option, but I have no control over what they want. I’m surprised at the number of people who do not have a bank account and so choose to use the Emerald card or get a paper check. All fees are always disclosed and I tell my clients that I get no extra compensation if they choose a bank product.

    I think the AG’s across the country think the clients who choose a bank product to get their refund are stupid. Let that person make up their own mind.