Wednesday, January 6, 2010

H&R Block has to give you 19.4 million dollars back.

H&R Block had a great idea: instead of giving instant tax refunds to their customers, get them to buy IRA's with their refunds which returned almost no interest and saddle them with undisclosed fees, thus making them a lot of money.

At Turkheimer & Hadden we pursue unfair business practices to their source and are pleased at the result of this case.

H&R Block Inc. agreed to refund as much as $19.4 million in fees to customers who bought “Express IRAs,” settling a lawsuit that alleged the retirement accounts were deceptively marketed and almost certain to lose money.

H&R Block, the largest U.S. tax preparer, also will pay $750,000 in fines, fees and costs to New York, state Attorney General Andrew Cuomo said in a statement today.

The settlement stems from a case filed in 2006 by then-New York Attorney General Eliot Spitzer, claiming H&R Block encouraged clients to put tax refunds into Express Individual Retirement Accounts in which fees exceeded earnings. Cuomo, who took over the case, said that H&R Block opened more than 600,000 Express IRA accounts for its tax-preparation clients since 2000, and that 85 percent of them paid more in fees than they earned in interest.

“H&R Block’s aggressive peddling of fee-laden retirement accounts that were virtually guaranteed to lose money needlessly cost families across the country millions of their hard-earned dollars,” Cuomo said in the statement.

The attorney general’s office claimed H&R Block failed to disclose fees or warn that the interest paid wouldn’t cover fees in certain cases, and that it misleadingly described the interest rates as “great,” when they were sometimes less than 1 percent a year.

- from Bloomberg

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