H&R Block Is Sued Again, But Its Bank Charter Is Approved

H&R Block Inc. is facing another lawsuit, this time from New York Attorney General Eliot Spitzer, for fraudulent marketing of savings plans to hundreds of thousands of income tax filers. In last month’s hearings, Spitzer argued that the company steered clients, many of them low-income, into individual retirement accounts that were “virtually guaranteed to lose money.” About 85 percent of the approximately 500,000 people who put money into the Express IRA since 2002 have lost some of it due to high fees and low interest rates, according to Spitzer. The attorney general is seeking to fine the company $250 million.

Spitzer’s case represents one of three lawsuits filed against H&R Block in the past year. Earlier this year, California’s Attorney General Bill Lockyer sued H&R Block over its refund anticipation loan business, whose interest rates top 500 percent including fees. H&R Block agreed to pay $62.5 million to settle four class-action lawsuits on refund anticipation loans in 2005.

Advocates concerned about H&R Block’s practices and history also question the Office of Thrift Supervision’s recent approval of H&R Block’s application to start its own savings bank. OTS stood by its decision, noting that H&R Block has “appropriately addressed those issues” and that the company’s “character and responsibility” is consistent with its approval. (For the OTS bank charter approval, see http://www.ots.treas.gov/docs/6/660007.pdf.)

For additional information, contact Ian Gardiner or Dory Rand of the Sargent Shriver National Center on Poverty Law. Information for this article came from the British Broadcasting Corporation, the New York Times, and the Chicago Tribune.