H&R Block agreed to refund up to $19.4 million in fees to settle charges the tax preparation giant steered hundreds of thousands of customers to put money into its "Express IRA" program knowing it was virtually guaranteed to lose money, the New York Attorney General's Office said.
Low interest rates and an array of fees prevented the accounts from benefiting the investors, primarily lower and middle income families, Attorney General Andrew M. Cuomo said in a written statement.
"H&R Block's aggressive peddling of fee-laden retirement accounts that were virtually guaranteed to lose money needlessly cost families across the country millions of their hard-earned dollars," Cuomo said. "This settlement will provide a measure of relief in these difficult times."
H&R Block did not immediately respond to a request for comment.
Those who are eligible for a refund of the fees will be contacted by an administrator appointed by the court. New York's settlement coincides with the settlement of other similar claims lodged in federal court against the company.
New York officials said H&R Block opened more than 600,000 Express IRA accounts since 2000. Customers were steered to the accounts for its "great rates" and because it was "a better way to save."
About 85% of the customers with Express IRA accounts paid more in fees than they earned in interest, causing a significant percentage to cancel the accounts and incur yet more fees.
Cuomo's office alleged H&R Block continued to push the program on its customers despite knowing they were steering them into a proposition virtually certain to lose money.
The settlement calls for refunds of all fees to those with Express IRA accounts since 2000 as well as $750,000 in fines and other costs to the state of New York. In addition, the company agreed to convert all those accounts to a different type of account with lower fees and to be more upfront regarding fees.
Take the first steps to building your portfolio.View Course »