Reuters reports that New York Attorney General Andrew Cuomo said the accord calls for the tax preparer to refund $11.4 million to $19.4 million of fees to customers nationwide who opened one of its Express IRAs. H&R Block will also pay $750,000 in fines and other costs to the state, and convert Express IRAs into new retirement accounts that do not charge fees.
Jan 04, 2010 --- H&R Block Inc will pay as much as $20.2 million to settle a New York lawsuit accusing it of fraudulently marketing individual retirement accounts (IRAs) that charged hidden fees. ---
Cuomo said the size of the refund depends on the number of claims made, according to Reuters.
In addition, H&R Block settled private class-action lawsuits based on the same allegations which were pending in the federal court in Kansas City, Missouri, where the company is based.
New York had accused H&R Block of steering more than 600,000 customers to Express IRAs, without disclosing hidden fees that wiped out the interest that 85% of them could earn. Eliot Spitzer, Cuomo's predecessor, filed the lawsuit in March 2006.
Spitzer originally sought $250 million of civil penalties and other remedies. His lawsuit had said the median Express IRA account had a $323 balance, too low for investors to offset such charges as $10 annual maintenance fees, $15 set-up fees, $15 "re-contribution" fees, and $25 termination fees.
Gene King, an H&R Block spokesman, called the New York settlement "satisfactory for all parties," according to Reuters. He had no immediate comment on the class-action settlement.
Among the defendants in the New York case was H&R Block Financial Advisors Inc, which the company sold in 2008 to Ameriprise Financial Inc. Ameriprise did not return Reuters' call seeking comment.
The case is New York v. H&R Block Inc, New York State Supreme Court, No. 401110/2006.