Tax Information And Guide

H&R Block Inc., the U.S. tax preparation company, said on Wednesday it reached an agreement to settle four class-action lawsuits that claimed it defrauded consumers who took out high-interest, short-term loans against their expected income tax refunds.

Under the proposed settlement agreement, which requires the approval of a court in the state of West Virginia, H&R Block would pay $62.5 million to the estimated 8 million class members and the lawyers who represented them. A hearing on the settlement is scheduled for Thursday.

If approved, the settlement would result in an after-tax charge of $31 million, or about 9 cents a diluted share, in the quarter ending January 31, the company said.

Under the proposal, H&R Block would also agree to implement "industry-leading disclosure" practices that would make it clear to consumers the true cost of the loans, known as refund anticipation loans. The loans were typically made for a flat fee, which, given the small amounts loaned and the short period the loans remain unpaid, translated into annual interest charges in excess of 100 percent.

The proposed settlement does not end H&R Block's refund- related legal woes. A nationwide class action lawsuit filed in federal court in Chicago is scheduled to go to trial early next year.

Earlier this year, the judge hearing that case rejected a proposed $360 million settlement, saying it was inadequate.

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