A federal judge barred H&R; Block, the
nation's largest income tax preparer, from using misleading phrases
to advertise its "Rapid Refund" loan program and ordered to pay
more than $500,000 to an upstart rival.
Block has been sued before over its advertising for "Rapid
Refund," in which tax filers receive bank loans for the amount of
their anticipated refund. But the financial institutions can charge
fees or interest.
U.S. District Judge Raymond Jackson in Norfolk accused H&R; Block
of deliberately and maliciously using deceptive advertising to draw
customers in the Hampton Roads area just as a competing tax
preparation service, was launching its business there.
"We feel that this is a victory not only for Liberty Tax
Service, but also for taxpayers who didn't fully understand the
terms of this loan product because they weren't properly
disclosed," said Lenny Holt, Liberty's chief operating officer.
The ruling ordered H&R; Block to pay Liberty Tax Service
$507,477, representing a portion of Block's profits in Hampton
Roads in 2000. The advertising also appeared last year in
California, Iowa, New York and Ohio.
In 1993 in Connecticut, H&R; Block agreed to change its
advertising for refund anticipation loans after the state consumer
protection agency complained.
The company's "past advertising conduct and prior notice
regarding the use of the term 'refund"' along with an internal
company report on the program indicate the company acted in "bad
faith in repeating such advertising during the 2000 tax season,"
Jackson wrote in his ruling released Monday.
H&R; Block "strongly disagrees with the judge's finding of
maliciousness" and will appeal, Linda McDougall, a spokeswoman for
the Kansas City, Mo.-based company, told The New York Times.
The company filed a motion Monday asking that it continue to be
allowed to use the term "rapid refund," a request Jackson denied,
the Times reported. It said Jackson gave the company until March 9
to remove a list of what he called offending terms from its
Liberty Tax Service operates 500 offices in the United States
and Canada. H&R; Block operates 10,000 offices in the United States,
Canada, Australia and the United Kingdom.