H&R; Block to Settle Refund Loan Suits

Tax preparer H&R; Block Inc. agreed Wednesday to pay $62.5 million to settle a number of class-action lawsuits dealing with its use of refund anticipation loans.

A Circuit Court judge in West Virginia is scheduled to consider the settlement Friday. If approved, it will resolve four class-action suits filed in West Virginia, Ohio, Alabama and Maryland, as well as claims pending in 22 other states and the District of Columbia.

H&R; Block said the settlement would cover more than 8 million customers who got the loans between 1989 and 2005.

The company already set aside money for a potential settlement but said it expected to take a third-quarter, after-tax charge of $31 million, or 9 cents a share, to cover the rest.

Under the refund anticipation loans, customers entitled to a tax refund could receive most of the money in two or three business days by paying a fee to file the return electronically plus a loan-processing fee.

Critics claim that such loans prey on low-income households, immigrants and financially unsophisticated taxpayers who aren’t adequately informed about high interest rates.

Besides the money, H&R; Block agreed to advise customers in the future about other options in filing taxes and gaining refunds quickly, as well as any interest charges or other fees they would have to pay.

Company spokeswoman Linda McDougall called the settlement a “fair and adequate resolution.”

The settlement clears up all but two lawsuits tied to the refund loans. A federal case accusing the company of racketeering is scheduled to go to trial in Chicago in March, and a 1992 case is pending in Pennsylvania.

Shares of Kansas City, Mo.-based H&R; Block rose 25 cents to $23.95.