$4.5 million H&R Block settlement for deceptive tax refund anticipation checks

Tax season is upon us, and it will probably bring the usual laundry list of financial fakery designed to take a bite out of anticipated refunds. In the past, many taxpayers have fallen prey to misleading pitches to get refund cash before the IRS actually processes the returns.

On Friday, California's Office of the Attorney General announced a $4.85 million settlement with tax preparer H&R Block, which allegedly disguised refund anticipation loans as refunds. The difference lies in the fees and costs of the loans or "refund anticipation checks." Authorities also allege that H&R used employed unfair collection practices in conjunction with the loans.

H&R did not admit guilt in the settlement, which stems from a suit filed against the company in 2006.

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

The terms of the settlement are good for three years, and it leaves H&R on its own recognizance in California, where it is required to employ "mystery shoppers" at 18 corporate-owned H&R offices in each of the next three years. The company has hundreds of offices in California and 13,000 across the country.

 The Attorney General's office says that a settlement administrator will contact eligible consumers, but those who think they may be entitled to recompense can write to the Attorney General’s Public Inquiry Unit at P.O. Box 944255, Sacramento, CA 94244-2550, or may send an electronic message at http://ag.ca.gov/contact/. 

The moral of the story: read the fine print attached to any offer purporting to secure you an "early" refund. Failing to do so could cost you a lot of money.