A federal judge has approved a $39 million settlement in a long-running class-action lawsuit against H&R Block Inc. by customers who claimed they paid too much for refund anticipation loans.
“I conclude that the settlement in this case is fair and reasonable,” U.S. District Judge Elaine E. Bucklo said in an order issued Monday approving the third effort to reach a settlement in the suit which has dragged on since 1998.
The 7th U.S. Circuit Court of Appeals threw out a previous settlement, saying it was inadequate and Bucklo rejected a second version.
Block has now agreed to pay $39 million in cash plus an estimated $850,000 in interest for six months.
The loans in question were part of a program under which customers who had their taxes prepared by Block were offered their refunds immediately in return for a fee. The suit said the refunds amounted to loans and cost too much.
Block argued the customers knew what they were doing when they accepted the refunds.
Chicago attorney Ronald Futterman, who represented the plaintiffs, said that if no more claims were submitted before a deadline at the end of October, those eligible would be paid about $78 for each of their loans.
“We thought the settlement that we proposed was very favorable and we’re very pleased that she accepted it,” Futterman said.
At its Kansas City headquarters, H&R Block issued a statement, saying it was “pleased with the court’s decision to approve this settlement.”
“We view it as fair and beneficial to the class members and we’re eager to put this nearly decade-long lawsuit behind us as we continue preparing for the upcoming tax season,” the company said.
The settlement amount includes $2 million for notifying some 1.7 million customers that they are eligible to receive money, Bucklo said.
Attorneys for the class members, or eligible customers, have asked for $6.25 million in fees and $1.5 million in expenses from the settlement.
The suit has a tortured history. The initial $25 million settlement approved by U.S. District Judge James B. Zagel set a payment of $15 per loan and capped payments at $30 for each claimant. It sought to settle millions of disputed refund anticipation loans made between 1987 and 1999.
The new settlement involves at most 1.7 million loans made between April 1994 and December 1996.
A federal appeals panel threw out the first settlement in April 2003, saying that the judge had “painted with too broad a brush, substituting intuition for evidence” in deciding how large a settlement was adequate.