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Tax Preparer Settles RAL Class Actions

by Glen Shapiro, LawAndTax-News.com, New York

27 December 2005


H&R Block Inc. announced last Wednesday that it has reached an agreement with plaintiff class representatives and class counsel that would settle four state class action lawsuits related to refund anticipation loans (RALs) as well as potential claims of RAL purchasers in 22 other states and the District of Columbia.

RALs are short term advances that tax preparers can extend to their customers, who then sign over their official tax refund cheques when they are issued. However, Block was accused in the class actions of charging "usurious" rates for this service.

The proposed settlement provides for $62.5 million in the settling jurisdictions. Payments will be made to class members who submit a timely proof of claim for RALs they had obtained from as early as 1989, in some instances, to 2005.

The proposed settlement also requires H&R Block to put in place "industry-leading disclosure practices" for future refund anticipation loans provided to its clients.


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