H&R Block Accused of Preying on Poor

[The Straight Story]

H&R Block Accused of Preying on Poor


LOS ANGELES (CN) - A federal class action claims H&R Block targets the working poor and minorities for tax-refund anticipation loans that, combined with Block's "exorbitant" and illegal fees, charge annual interest rates of more than 100 percent.

Named plaintiffs Anthony Johnson and Phyllis Robinson say H&R Block "aggressively" markets its loans at "exorbitant triple-digit interest rates to working poor and minorities" with "finance charges, that when properly calculated in accordance with the Truth in Lending Act, often exceed 100 percent APR."
Robinson and Johnson say H&R Block did not provide them "any disclosures regarding the APR or finance charges" in preparing their refund anticipation loans.

"Although a significant profit source to defendant and other for profit tax preparers, and a fundamental part of their business models, these aggressively marketed bank products provide little to no value to consumers at predatory interest rates and fees, often in conjunction with exorbitant tax preparation fees for straightforward tax filings," the complaint states. "Tax filers can usually get their federal tax refund in 8 to 15 days by direct deposit, without getting a loan or paying any extra fees to companies like defendant. The IRS usually issues refunds by check within 21 to 28 days.

http://www.courthousenews.com/2011/11/21/41601.htm

[dkf]

1. There should be no need for tax preparers... We need to simplify the tax code so it's unnecessary.

[MedicalAdmin]

3. how simple? flat? n/t

[jberryhill]

4. Most of these are form EZ qualified taxpayers

It really doesn't get much simpler than that.

What these services do is advertise "instant refund" without indicating that it is a loan against assignment of the refund.

[dkf]

6. So they are perfectly capable of filling these out but pay someone to do their taxes

And pay the advance fee so they can get their funds a week earlier?

If that is so, are they capable of not being ripped off in life?

[jberryhill]

8. It's deceptively sold as an "instant refund" and words to that effect

While a lot of folks are perfectly capable of filling out a 1040EZ, these services:

1. Convey the impression that they will save you money by "finding" more deductions, etc., which is normally not true; and

2. Advertise various species of "rapid" or "instant" refund.

Deceptive advertising is deceptive advertising. It is one thing to be very intelligent, educated, and a trained critical thinker, and it is another thing to trust people who are friendly and seem smart. That is why we have, for example, an FTC.

It is not legal to lie to people and take their money. It is not a question of whether they can do it themselves, it is a matter of false advertising and failure to disclose terms.

[subterranean]

5. Although I agree with your point, that's not what this is about.

It's about tax preparers steering mostly poor, financially illiterate customers into very short-term loans at triple-digit interest rates without disclosing the APR and finance charges.

[dkf]

7. The government should just do these for people with the info that gets sent from employers and

Financial institutions.

You can't protect the financially illiterate by requiring disclosures. Might as well be speaking Chinese.

[jberryhill]

9. Actually, there are a number of organizations which enlist volunteers

Perhaps you might find one in your area to help out.

[xchrom]

2. Recommend

[Kaleko]

10. K & R

[Electric Monk]

11. Well, duh? That's their business model. Some cash now, but we cash your real check later for more.