H&R Block announced enhancements to its refund anticipation loan product that will inform clients about possible tax-related debt and the potential cost of the loans, the company announced Tuesday. In September, H&R Block announced that it could reduce costs by nearly 40 percent for clients who agreed to pay for the loans through the new H&R Block Emerald Prepaid MasterCard issued by H&R Block Bank.

“Besides saving our clients money, we’re doing even more to make sure H&R Block customers receive the best service and disclosure in the industry,” said Mark A. Ernst, chairman and CEO of H&R Block.

“We are confident that by teaming up together, H&R Block and HSBC can provide clients the opportunity not only to make more informed choices, but also that those choices are for more innovative products which specifically address our clients’ needs,” said Patrick Cozza, group executive of insurance and taxpayer financial services for HSBC, the company’s banking partner.

The improvements to the refund lending process include:

• A new “debt alert” service. H&R Block will notify clients who are interested in a refund anticipation loan if they have outstanding debt from a prior loan or tax preparation fees that will affect the amount of their current loan.

• Improved disclosure process. Clients will be given a side-by-side comparison chart outlining all filing options, fees and the time it will take for the client to receive the refund. Clients will also be given a free H&R Block Advantage Report. The report provides customized tax, budgeting, banking and government benefit information. The report and the tax professional will tell clients that they will keep more of their refund if they choose a non-loan product.

Loan disclosure documents are provided to H&R Block customers during their discussion with a tax professional about tax refund settlement options, the company says. The documents make it clear that refund anticipation loans are loans.

The new H&R Block Emerald Card allows customers to direct deposit future payroll and tax refunds and reduces or eliminates other transaction charges that can cost clients without bank accounts $600 a year, the company says.

H&R Block spokeswoman Linda Mc Dougall said the changes were not “inspired by litigation,” Reuters reports.

In August, H&R Block agreed to pay $39 million to settle a class-action lawsuit in Chicago over the loans. H&R Block split the payment with Benefit National Bank, now HSBC, the Associated Press reports.

California’s attorney general, Bill Lockyer, filed suit against the company over their marketing of the loans. Tom Dresslar, spokesman for the attorney general’s office said, according to the AP, that the changes would not affect the lawsuit which covers the company’s liability for past actions.