H&R Block Agrees To Meet With States

Led by representatives from Connecticut, North Carolina and crusading New York Attorney General Elliot Spitzer, a group of states continues chasing H&R Block over loans made to customers in anticipation of a refund. Spitzer was especially dogged, joining the others in a suit against Block at the height of tax season.

Spitzer's suit claimed that tens of thousands of New Yorkers and hundreds of thousands of consumers nationwide had been steered wrong by the company. The entire tax preparation industry continues to come under fire, while ratcheting up the stakes for lower-income returns that boost profit margins.

The latest wrinkle is the so-called "paycheck stub" loan. In this transaction, a company provides a refund based on a customer's last paycheck of the year, regardless of what tax liabilities or issues have occurred throughout the year. The rates, Spitzer and others claim, are too high and target an ill-informed consumer market.

Word now comes out of the Missouri company's headquarters that the tax giant, which will book nearly $5 billion in revenue in 2006, will meet with a representative group of officials from different states. Consumer advocates are wary of the meeting, not only because Block is a mult-billion organizaation, but because a compromise agreement may end up being struck that could involve one of H&R Block's other three divisions making use of data provided by the tax division to market the same loan.

"At the end of the day, all people want to see is a fast refund," said Consumer Help Web President Joan Bounacos. "We encourage those people to seek tax counseling earlier in the year so that they are not getting the smallest possible refund. A tax refund sounds like a good idea, but is really an interest-free loan to the government, and because of inflation, ends up costing consumers more than they get back. The net effect is almost always a loss."

Tags: H & R Block , tax , lawsuit

posted by Consumer Help Web Editorial Team at 10:11 PM |