Class-Action Suit Against H&R Block to Proceed

The Supreme Court has cleared the way for a class-action suit that accuses H&R Block, the nation's largest tax-preparation company, of charging as many as 17 million customers inflated interest on refund loans, the Houston Chronicle reported, citing news wires.

The suit contends that H&R Block charged as much as 100 percent in interest on the refund loans and customers were not told that the company profited from the loans, which were advances on estimated tax refunds, the Chronicle reported.

The high court this week let stand a lower court's decision that the case should go forward as a class-action suit.

H&R Block and its banking partner Household Finance once tried to settle the case for $25 million, a deal that was overturned by a federal appeals court, which said the lawyers pursuing the case had inadequately represented the customers' interests.

As lawyers for the consumer urged the Supreme Court to stay out of the matter, H&R Block and Household argued unsuccessfully that the case would be unwieldy as a class-action because, under federal racketeering law, each consumer seeking damages would have to show misrepresentations by the company, the Chronicle reported.

The case is set to go to trial later this year in Chicago, according to the lead attorney for the group, Roger W. Kirby.

H&R Block "preys upon vulnerable, low-income taxpayers, omitting material information in order to impose extraordinarily high interests rates and other charges," Kirby argued in court papers.

The lead plaintiff in the class-action case, Lynne A. Carnegie, says she paid $110 for a nine-day loan of $500.

H&R Block has taken steps to settle some of the refund loan cases filed against the company, setting aside $43.5 million in 2003 to cover the largest of those settlements, a Texas case, the Chronicle reported.

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