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Case ID: 4919 | Insurance | 09/21/2006
Cheryl Reynolds filed a class action suit against H&R Block claiming the business defrauded consumers seeking instant income tax refunds.
Plaintiff also names Household Bank as a defendant. According to the complaint, the defendants make refund anticipation loans (RALs) to taxpayers who file their tax return electronically. "The RALs are made at a very high interest rate, often as much as 800%," the complaint alleges. Reynolds claims the defendants misrepresent material terms of the RAL, including cost. "Defendants unlawfully bait the consumer with low fees and then switch to higher fees in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and similar unfair and deceptive acts and practices statues of other states," the complaint states. Reynolds claims the defendants misrepresent the cost of a RAL in the application by not disclosing the cost of the electronic filing. She claims the total cost of the RAL is only disclosed once the consumer receives his refund check from the defendants which is usually three to five days after they apply. "The electronic filing fee which ranged from $25 to $95 during the class period can double, if not triple, the cost of the RAL," the complaint states. Reynolds contends that since the consumer is required to file electronically as a condition of obtaining an RAL, the electronic filing fee is a finance charge. She claims the defendants misrepresent the amount of the finance charge in the application. "Defendants further fail to advise consumers that their tax returns could be filed electronically at a lower or no cost through the Post Office or Internal Revenue Service programs," the complaint states. According to Reynolds, borrowers are often required to pay loan document preparation fees, administrative fees or surcharges to H&R Block for preparing the RAL documents. She claims the defendants know the amount of the fees and other charges the consumer will be required to pay, however they do not disclose those fees on the application. Reynolds also claims that Household pays H&R Block a kickback in order to encourage customers to apply for a RAL. "The consumer does not know that he or she is paying an artificially inflated finance charge to accommodate hidden kickbacks from Household to Block," the complaint states. According to the complaint, there is no federal jurisdiction over this case because Reynolds does not seek damages in excess of $75,000 and because no claims arise under the laws of the United States. She claims Madison County is the proper venue because H&R Block is a non-resident of Illinois which allows commencement in any county and also because all of the defendants do business in Madison County. Reynolds claims had she and the class known the true cost of the RAL, they would have sought a RAL lender whose fees were lower, chosen to file electronically file their returns elsewhere at a lower cost, or chosen to simply wait the two weeks for the IRS to mail the check. According to the complaint, anyone in the country who obtained an RAL from the defendants from 1987 are eligible to join the class. At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Insurance Cases of Interest The use of substandard non-original equipment manufacturer parts in auto repairs as required by auto insurance companies is a topic of growing controversy. The class has been certified in a class action filed against Government Employees Insurance Company on behalf of Illinois auto insurance policyholders who allege that the company forces them to use lower-quality parts to fix their vehicles in violation of their policies. The parties have reached a $20 million settlement in an administrative proceeding filed by the SEC against subsidiaries of Conseco, Inc. (CIHC, Inc., Conseco Services, LLC, and Conseco Equity Sales, Inc.), and the company to which Conseco sold its variable annuity business in 2002, Inviva, Inc., and its subsidiary Jefferson National Life Insurance Company. The action alleged that the insurance companies facilitated market timing of mutual funds through the sale of variable annuities, harming investors who purchased variable annuity products from the companies. Persons eligible to take part in the settlement should contact the attorneys who prosecuted the case for more information. The parties have reached a tentative settlement apparently valued at $25 million in several actions filed against UICI, Inc., and its principal insurance subsidiaries MEGA Life and Health Insurance Company and Mid-West National Life Insurance Company of Tennessee on behalf of policyholders insured through groups associated with the companies. Persons eligible to take part in the action should contact the attorneys for the class for more information. "Reasonable and customary" provisions in healthcare policies often determine how much the insurer will pay on claims. The parties have reached a tentative $630,000 settlement in a class action against Educators Mutual Life Insurance Company on behalf of all persons who allege that. since September 1, 1998, the company reduced benefit payments for anesthesia services in violation of its contract with them. Numerous class actions have been filed against New Hampshire banks and credit insurance companies on behalf of persons who financed vehicles in New Hampshire, purchased credit life or credit disability insurance, and then paid off their loans early between 1999 and the present. The actions allege that the defendants failed to return the unused premiums in violation of New Hampshire insurance law. A class action has been filed against American Investors Life Insurance Company on behalf of senior citizens in California who were sold expensive annuity policies that allegedly offer no benefit payouts for at least ten years. The suit alleges that the company has engaged in unfair business practices by improperly targeting the marketing and sale of these annuities to senior citizens.
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