Consumer Groups Oppose H&R Block Application for Bank Charter

Five major consumer groups, led by the California Reinvestment Coalition in San Francisco, are urging federal regulators to reject H&R Block Inc.’s application for a bank charter. They contend that a bank charter would make it easier for H & R Block to market costly tax refund anticipation loans and subprime home mortgages in low-income neighborhoods. The largest tax preparation company in the country, H & R Block filed last May for a bank charter through the Office of Thrift Supervision.

According to a report from the Brookings Institution, 38 percent of all working families receiving the Earned Income Tax Credit forfeited significant sums on tax refund anticipation loans at interest rates that generally exceeded 200 percent in 2003. Many of H & R Block’s clients have filed class action and other lawsuits over exorbitant fees and other loan terms.

Illinois Sen. Jeff Schoenberg this year sponsored a bill to protect Illinois consumers from tax refund anticipation loans, but the Illinois General Assembly did not pass the bill in the last session. Senator Schoenberg is expected to sponsor a similar bill next year.

For more information, contact Dory Rand at 312.368.2007.