H&R Block Inc. has been accused by New York State Attorney General Eliot Spitzer with fraudulently marketing retirement savings plans to clients. The lawsuit filed against the largest U.S. tax preparing company has suggested that H&R Block has caused about 500,000 mostly low income clients to lose money on individual retirement accounts (IRA's).
The attorney general has said that H&R Block steered customers to invest in IRA's without disclosing hidden fees that outpaced the interest earned from the retirement accounts causing about 85% of the clients to lose money. Clients who closed their failing Express IRA accounts also suffered tax penalties. The lawsuit is seeking refunds from H&R Block along with $250 million in fines. The suit also charges that H&R Block used the retirement plan accounts as bait in an attempt to make tax clients return each year with an initial minimum $300 deposit.
Attorney General Spitzer stated that a tip from a tax preparer and complaints from customers launched the investigation into H&R Block's Express IRA product. The complaint has been filed in Manhattan state court and has cited that internal documents show that senior H&R Block management knew that customers were losing money on the Express IRA product.
H&R Block IRA Fraud in the NewsApr-12-06: H&R Block fees rise 3.7 percent, inspite of the lawsuit filed by New York Attorney General Eliot Spitzer claiming fraud in marketing individual retirement accounts. [REUTERS]
Apr-04-06: Multiple lawsuits plague H&R Block as it attempts to diversity its services. [COLUMBIA DAILY TRIBUNE]
Mar-15-06: New York files $250 million lawsuit against H&R Block for fraudulently marketing their Express IRA retirement; low-income clients lost money and incurred fees and tax penalties when canceling their poor-performing IRA accounts. The complaint also claims that H&R Block managers knew these customers were losing money. [MSNBC]
Mar-20-06: Class Action filed accusing H&R Block of selling money-losing IRAs to low-income clients. (Mar-20-06) [LAW.COM]