NEW YORK – HSBC Finance Corp. said Thursday it will stop offering some tax refund loans, popular but controversial products that let taxpayers who expect refunds get their money early, but at a potentially high cost.
In a statement, the Prospect Heights, Illinois-based unit of HSBC Holdings Plc said it will discontinue “pre-season” and “pre-file” products beginning with the upcoming tax season. It said it will work with partner companies to “significantly modify” contracts as they mature.
Two months earlier, a federal judge in Chicago approved a $39 million settlement to end a class-action lawsuit against H&R Block over loans it offered through its partnership with HSBC. The prior February, California’s attorney general sued H&R Block for overcharging thousands of poor customers for the loans. HSBC and H&R Block were originally charged with racketeering, influence and corruption (RICO) designed to enforce actions against organized crime. HSBC Finance was originally known as predatory lender Household International, monitored in detail by watchdog organization Household – HSBC Watch.
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