H&R; Block Will Give Coupons to Settle Suit Over Refund Loans

H&R; Block Inc. said Tuesday that it would give 700,000 customers rebate coupons for tax preparation services to settle a class-action lawsuit in Texas over loans given in advance of tax refunds.

The settlement, which also covers the plaintiffs’ legal fees, removed uncertainty about the company’s potential legal liabilities. Its ailing shares jumped as much as 12%.

The Kansas City, Mo.-based tax preparer, which has seen its shares drop by as much as a third this month largely on its legal troubles, said it would take a pretax charge of $41.7 million, or 14 cents a share, against results for its second quarter ended Oct. 31 because of the settlement.

“It’s nice for them to have this out of the way,” Morningstar analyst Rachel Barnard said. “This has been weighing on the share price pretty severely.”

Block said the settlement, for which court approval is pending, would apply to all related suits in Texas stemming from its lack of disclosure of licensing and marketing fees it received from Household International Inc.

A banking subsidiary of Household issued high-interest loans to Block customers who wanted to receive their expected tax refund money immediately, rather than wait weeks for the government to process their returns.

Block said the settlement was separate from a $25-million settlement in Illinois awaiting court approval that also involves the loans.

Block shares rose $2.35, or 7%, to $37.53 on the New York Stock Exchange.