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Karl A. Racine
Office of the Attorney General for the District of Columbia

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Interim Corporation Counsel Announces Settlement with H&R Block Services

Thursday, April 24, 2003

(Washington, DC) DC) H&R Block Services, Inc. has agreed to establish a fund to reimburse clients who paid for the tax-preparation company's "Peace of Mind" guarantee but may not have wanted to purchase the optional service, Interim District of Columbia Corporation Counsel Arabella W. Teal announced today.

The agreement, reached by the DC Office of the Corporation Counsel, attorneys general of 41 states and H&R Block, concerns the company's guarantee to pay up to $5,000 of any additional income tax owed due to a preparer's error.

"This settlement will provide restitution customers who were charged for the Peace of Mind guarantee but who do not believe they were adequately informed of their choice," said Teal. "The agreement will prevent this problem from arising in the future, as well."

District and state officials said Block added a fee of $22 for the Peace of Mind guarantee to consumer tax return preparation invoices, without first obtaining the consumer's affirmative acceptance. Block denies that it violated any consumer protection statute and maintains that it did not deprive its customers of the choice.

The agreement calls on H&R Block to establish a fund of $1 million to be utilized to pay refunds to eligible consumers who had a tax return prepared at an H&R Block office in tax season 2001. Under the terms of the settlement, H&R Block will seek a consumer's affirmative agreement before charging for the guarantee in the future. The company may not make a representation that it "recommends" purchasing the guarantee until the customer has been provided the material terms and conditions of the guarantee. H&R Block also agreed to reimburse the states for the cost of bringing the action against the company.

To be eligible, consumers must have had a tax return prepared in the 2001 tax season, been charged for the guarantee as an additional component, never utilized the guarantee and believe they were never informed that the guarantee was added for a fee to their tax preparation service, Teal explained.

Eligible consumers must make a request within 120 days of the agreement (dated April 24, 2003), either by phone to a toll free number (866-522-7083) H&R Block established, or by the website that H&R Block is creating for customer refund requests. The website is also available in Spanish.

Consumers must make their application for refund with 120 days of the date of the agreement among the District, the 41 states and H&R Block.