Block, HSBC Settle Predatory Lending Suit

Chicago (Aug. 31, 2006) – Tax prep giant H&R Block Inc. announced that a federal judge has approved a $39-million settlement of a class-action lawsuit brought by customers over the company’s refund anticipation loans. A U.S. district court judge approved the settlement, the group’s third effort to reach a agreement in the suit, which has dragged on since 1998. Block and co-defendant Beneficial National Bank — now owned by London-based HSBC — will split the payment.

The lawsuit is one of several alleging that Block failed to disclose high costs and other features of RALs made to more than 17 million clients over a 13-year period.

In December 2005, Block announced a combined $62.5 million settlement for four similar class-action suits involving 8 million clients. Another set of claims, alleging federal racketeering violations, is scheduled for a hearing next month. Earlier this year, California Attorney General Bill Lockyer filed another lawsuit seeking damages for 1.5 million California residents with refund loans dating from 2001. Block has denied those allegations and is fighting the suit