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    HR Block Suit on RALs

    Greetings:

    Have any of you read of the multi-million dollar award from HR Block regarding RALs sold by their employees to customers? Why was nothing mentioned about banks involved in these RAL's or did Block finance their own transactions? What is your prediction of the future of RALs since this court ordered settlement has been made? What was the basis of this judgment?

    #2
    Hr Block Web Site

    H&R Block and Attorneys Propose Refund Loan Settlement To Court
    Settlement to Resolve Most Pending Refund Loan Litigation

    FOR RELEASE Dec 21, 2005


    H&R Block Inc. announced 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.

    The proposed settlement was filed today in Cummins v. H&R Block, an action that has been pending in the Circuit Court of Kanawha County, West Virginia since 2003. It would also settle the Becker v. H&R Block (Ohio), Mitchell v. H&R Block (Alabama), and Green v. H&R Block (Maryland) cases. Overall, the proposed settlement class would include more than 8 million consumers.

    The proposed settlement provides for $62.5 million in the settling jurisdictions. Payments would 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. H&R Block expects to record an after-tax charge of approximately $31 million, or approximately 9 cents per diluted share, in its fiscal third quarter ending Jan. 31, 2006.

    The proposed settlement would also require that H&R Block use industry-leading disclosure practices for future refund anticipation loans provided to its clients. These practices outline tax filing options, costs and loan obligations as well as the time required to receive refunds with each option, and are explained to refund anticipation loan clients during the tax preparation interview in H&R Block tax offices. The goal is to ensure that consumers have all the information they need to make the best choices that meet their financial needs and to ensure that the disclosures set the industry standard.

    The proposed settlement is subject to review and approval in West Virginia State Court. If preliminary approval of the settlement is granted, notices are anticipated to be mailed to class members by March 10, 2006. A hearing on preliminary approval is set for Dec. 23, 2005.

    If the settlement gains approval, H&R Block will have settled most of the RAL litigation that has been pending against the company since the 1990s. The only remaining cases would be the Carnegie case, a federal nationwide class action pending in Chicago that contains a single RICO claim against the company and is scheduled for trial on March 27, 2006; and Basile v. H&R Block, a 1992
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      HRB lawsuit

      HRB lost a similar lawsuit in Texas several years ago, the settlement payout given to those who filed claims consisted of discount coupons for tax prep at any HRB office. No money was paid out by HRB to the customers. Likely this will do the same, you have to go back to HRB to get your taxes done in order to take advantage of the discount you received as a settlement. I doubt this will affect HRB bottom line or their stock price much.
      "A man that holds a cat by the tail learns something he can learn no other way." - Mark Twain

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        #4
        Deep Pockets

        This is another example of the attorneys looking for deep pockets to pick. Because the service fee for the RAL is expressed as a percentage rate, it appears that some usurious practice is being foisted on the unsuspecting taxpayer.

        This is a Catch-22 situation, because the RAL is technically a loan and because the service fee is 200 or 300% it appears exorbitant. However, the interest is only for one or 2 days and the client knows exactly what it is, AND THEY DON'T CARE. They only want the money, and right now. They also get a disclosure statment which they sign. It is Block that is being victimized not the clients.

        In the Texas case, it was Bloch franchisees that were involved and not Block company offices.

        Ed

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          #5
          Deep Pockets?

          The HRB fee structure for RALs that I have seen in Middle Tennessee have not been expressed as a percentage of the refund, but rather fixed as a charge to the client for processing the paperwork. The BANK is the one raking in money for doing nothing.

          If they are really looking for DEEP POCKETS, why don't they go after BANKS? If their case is based on usurious fees, why would they have to go further?

          Comment


            #6
            Hrb Ral

            If they were after the usurers they would have gone after the banks. There must be more than usury involved. For one thing, HRB had to quit calling these loans "rapid refunds" since they were loans, not refunds.
            Another factor that may be involved is that HRB pushes these RALs on customers (most of whom would want them even if there were full disclosure).
            Unless the govt outlaws RALs they will persist.
            If outlawed, the HRB customers would manage somehow, but might shop for a cut-rate tax preparer who would do them dirt cheap.

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              #7
              HRB suit

              I am not a fan of the RAL's nor am I a fan of HRB. However, I am less of a fan of attorneys and the idiots that hire them for frivolous things like this.

              Don't tell me these people did not see the cost of doing the RAL. Don't tell me they could have waited the extra 7 - 10 days for a normal ELF refund to be direct deposited. This is nothing more than attorney's knowing that the big corporation will find it cheaper to settle than fight. These attorney's claim to be "sticking up" for these poor people who were ripped off by this corporation, but who is going to be getting the big bucks? The attorney's.

              Personally I feel that tort reform is long, long overdue. Companies need to be able to have a reason to want to fight and the people suing should be thinking twice if it is nothing but a frivolous pile of cow dung.

              Matt
              I would put a favorite quote in here, but it would get me banned from the board.

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                #8
                Vicious circle

                Originally posted by Matt Sova
                I am not a fan of the RAL's nor am I a fan of HRB. However, I am less of a fan of attorneys and the idiots that hire them for frivolous things like this.

                These attorney's claim to be "sticking up" for these poor people who were ripped off by this corporation, but who is going to be getting the big bucks? The attorney's.

                Personally I feel that tort reform is long, long overdue. Companies need to be able to have a reason to want to fight and the people suing should be thinking twice if it is nothing but a frivolous pile of cow dung.

                Matt
                I am in total agreement, but when you have a huge class action suit like this I don't think the "idiots" hired them, they just did not "fire" them. These attorneys start these suits to line their own pockets. These figures are not exact, but there was a settlement from HRB something like $360 million dollars of which $110 million was cash and $250 million was in the form of $6.00 per client coupon good on the next HRB service. My guess is the $110 million went to the lawyers, and most of the clients probably did not even know they had a suit against HRB.

                This happens with credit card companies too. I got a check a while ago from my credit card company for $1.49 to settle some class action suit for over charging customers, or something of that sort. Ha, I didn't know I sued them, but somewhere along the line I'm sure I got a piece of mail that I shredded with the junk mail offers that said I was going to be a part of this suit unless I responded to say that I did not want to.
                http://www.viagrabelgiquefr.com/

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                  #9
                  Tort reform

                  Originally posted by Matt Sova

                  I feel that tort reform is long, long overdue. Companies need to be able to have a reason to want to fight
                  I didn't know it was called that, but if it will stop price-gouging litigation, then it's badly needed indeed. Attorneys' fees for class action suits are outrageously excessive, while their clients get a pittance. I got a Class Action notice last year--don't have it now--against American Express. They (and maybe Visa and Mastercard) had a practice of not giving credit for payments until the day after it was received. It's pennies to you or me, but Amex probably make millions and, even though they shouldn't do it, there's still something almost obscene about half-a-dozen lawyers getting rich and a million stockholders getting a token payment. As I recall, attorneys' fees were about ten million--cardholders got a dollar or so each.

                  Here's a couple of other remarkable notices I got last month and still have.

                  (1) Proposed Settlement of Class Action: to all persons who purchased Amazon...stock...during the period 10-29-98 to 10-23-01 (I was one). There's eight pages of deep reading (enough, as Jesse said, to make you "not fire them"). Ordinarily I'd have thrown it away, but it was interesting just because of the terms (I'll condense it a bit--here's the gist of it): Suit is for $27,500,000 / Interest runs until paid / One of the issues is "the extent to which external factors, such as general market conditions, influenced the trading price of Amazon securities at various times during the Class Period"--(who could defend against that?) / Attorneys' fees of 25% of settlement proceeds ($6,875,000) and out-of-pocket expenses not to exceed $1,100,000 (to be deducted from shareholders' portion--estimated cost--three cents per share) / Average distribution to shareholders approximately ten cents per share (before the three cents fees). Result: lawyers--$7,975,000 -- Me (100 shares)--seven dollars.

                  (2) I suppose they were encouraged by Amazon and became ambitious. The next one was against "Red Hat" and 298 other Internet stock companies. The terms are truly staggering.
                  Suit--One Billion Dollars (minimum)
                  Costs of giving Class Action notices (mail and handling maybe?)--Up to 15 million dollars
                  Any expenses in excess of the 15 million to be paid out of the stockholders' portion (I've got a feeling they will exceed it).
                  Attorneys' fees--1/3 of total...let's see now, one billion (worst case) is a thousand millions, isn't it? So, that's...hmm...333 million dollars for the lawyers (good thinking about that mailing fee--might have come up short otherwise).
                  Incidental expenses at present total a mere $38 million, but it is anticipated that additional expenses will be incurred (guess inflation has hit the secretarial field, too).
                  My "Red Hat" stock--the included chart places recovery for my 100 shares at roughly two to three cents per share, or, rosy scenario-three dollars total; worst case-two dollars total, and I am truly grateful for the efforts of those crusading champions of the "underdog" even though, I must say, it does seem a tad one-sided.

                  p.s. A note on the bright side--if the settlement exceeds five billion, then the defendants can get part of their lawyers' fees paid by the lawyers for the plaintiff. Generous, eh?
                  Last edited by Black Bart; 12-29-2005, 07:25 AM.

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