Carnegie v. Household International HSBC
Lynne Carnegie v. Household International, Inc., et al.
In the United States District Court for the Northern District of Illinois. This is a national class action against various H&R Block entities, and various Household Bank (successor in interest to Beneficial National Bank) entities, arising out of these Defendants' Refund Anticipation Loan ("RAL") program. RALs are bank loans H&R Block arranges for its tax-preparation customers. The RAL is secured by the customer's anticipated tax refund. With a RAL, the customer can obtain the amount of his or her tax refund in a couple of days, but extremely expensive fees are deducted by the Defendants before payment to the customer. The overwhelming majority of RAL customers are poor and uneducated. Among other things, Plaintiff contends that the Defendants engaged in a classic bait-and-switch, and that the Defendants failed to disclose a kickback paid to Block by Household.
In this case, the United States District Court has certified RICO claims against both sets of Defendants, and a state-law breach-of-contract claim against the Household Defendants, on behalf of a national Class of over 17,000,000 RAL customers. These claims also withstood the Defendants' Motion to Dismiss. The Defendants took an interlocutory appeal of the class-certification issue to the United States Court of Appeals for the Seventh Circuit, which affirmed the class certification. The Defendants then petitioned the United States Supreme Court for a writ of certiorari, which was denied. Discovery is ongoing, and the case is set for trial in the fall of 2005.
New York plaintiff Lynne Carnegie paid $110 for a nine-day advance on a $500 tax refund. Block and Household took her money.
9 May 2005 UPDATE - yes that is correct. From 1998 until May of 2005, when now it is HSBC's responsibility.
CHICAGO, Ill. – HSBC Taxpayer Financial Services Inc. and H&R Block (NYSE: HRB) have reached an agreement with the plaintiff class representative and class counsel Kirby, McInerney and Squire, LLP and Levy, Angstreich, Finney, Baldante, Rubenstein & Coren, P.C., that would settle a 1998 Chicago class action lawsuit related to refund anticipation loans, as well as end all current RAL-related class action litigation against the companies.
The proposed settlement provides for $110 million cash and a total of $250 million in freely transferable redeemable coupons. The cash would be distributed to class members who submit a timely proof of claim, based on the number of RALs they had obtained. The coupons would have a face value of six dollars. You need proof, when some of the actions took place prior to 1998. Then you get six dollars.. This settlement was rejected.
Final Update: After many years this suit was settled on November 8, 2006. It was originally featured in our blog. Final court approval of this case can be seen here.
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