H&R Block, bank products, cross-collection, unethical wo

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I'm going to speak truth to power. I'm going to talk about a former employer, straight up. And since (1) it's a large company (the proverbial 800 lb. gorilla), and (2) I'm going to be including a fair number of supporting references, although not on everything I say, some of it will be my own personal experiences, and (3) I'm not going to be naming supervisors by name, I'm mainly going to be discussing company practices, and if in the course of a story, it's necessary to use names, I plan to use pseudonyms (Susan*, Roger*), I ask people to work with me.

Again, I'm David, they're Goliath. Please cut me some slack. And you may even want to join with me if you like! This takes a fair amount of research. You may know people who have been clients, and you will be doing them a favor.

It's an interesting job, but unless you really make an effort to inform your clients, it is also an unethical job. And it is a lonely job because over the course of several years only two co-workers have partially shared my concerns.

The bank takes all the customer's money.

How can you not be concerned about that? It boggles my mind even today. Well, a lot of people simply discount something written down, think of all the health warnings, think of how many of them are overblown and in a sense, you should discount them. People tend not to take something seriously unless it happens to someone they know. In fact, I would argue that one of our strengths as people with asperger's syndrome is that we care about strangers.

Approximately 1 client out of 200.

Maybe a little bit more, maybe a little bit less, but approximately there. Approximately one out of every 200 clients have their entire refund taken by the bank.

And this is even the 8 to 15 days (estimated) non-loan. Any method in which H&R Block takes their prep fees out of your refund is a bank product and is potentially vulnerable to this. The only way to avoid this risk is to pay Block up front strictly for the tax preparation.

The following is the lead court case that I am familiar with. It involves Jackson Hewitt. But H&R Block, Jackson Hewitt, Liberty Tax, they're very similar businesses.

And for my second post, please keep in mind that RAL means "Refund Anticipation Loan."

Hood v. Santa Barbara Bank & Trust (2006) , Cal.App.4th
http://fsnews.findlaw.com/cases/ca/caap ... 84489.html
“ . . . On January 31, 2002, Hood went to a Jackson Hewitt office for tax preparation service. A Jackson Hewitt employee told Hood that she had two options for a quick refund--a "rapid refund" that she could receive the next day, or another refund that would be payable within 48 hours. The Jackson Hewitt employee did not explain that these options were loans. Hood selected the option for payment within 48 hours. . . ”

http://fsnews.findlaw.com/cases/ca/caap ... 84489.html

“ . . . Santa Barbara sent Hood a letter dated February 3, 2002, stating that her RAL was denied because Santa Barbara had "been informed of an outstanding [RAL] debt with [Household Bank]." Santa Barbara's letter stated that Hood's 2001 tax refund would be used to satisfy the Household Bank RAL debt and that Santa Barbara would send Hood any funds remaining after the Household Bank RAL debt was satisfied.

“Hood did not receive her 2001 tax refund. Nor did she receive the Accelerated Check Refund described in the RAL application as an alternative product for applicants who were ineligible for RAL's. Without her tax refund, Hood could not pay her rent and she received an eviction notice. . . ”

First off, lets talk about how raw of a deal an income tax refund is in the first place (never mind the RALs). The IRS encourages and sets up its tables so that people have more taken out of their checks than is required, and then gives them their money back. All that is is a interest free loan to your government, nothing more. Fancy way to help out the national debt. On top of that, states that are having fiscal trouble, such as California, have issues IOUs in place of refunds (at least they are willing to pay interest on that). Now this year, California increased the witholdings to the point where anyone not paying attention will be due a refund. How much you want to bet that once refund time comes around, they issue IOUs again.

I've never understood why people are so stupid as to pay someone else to do taxes when a $30 software program (probably used by most tax prep offices) with almost idiot-proof step-by-step instruction can do the job for you as well or better?

Sadly, you are right. Tax prep isn't cheap, and they charge ordinary Joes about as much as if they were doing it for a major company. More so, any "rapid refund" issue is a scam, but if you're greedy enough to want a refund NOW rather than wait 4-6 weeks (or less if you get it done early), you get what you deserve.

As far as disclosure goes, that's the ethical duty of each worker. Unless the company threatens to fire them for telling the client the truth, each worker is choosing to screw over the client...no doubt for an enhanced "commission" for pushing the loan.

It's actually not too far from that! I personally have gotten in trouble for communicating with clients proactively about the bank products.

Okay, I'm going to try and respond later and in greater detail to the good points raised by both demeus and zer0netgain. But the short answer is, I don't want to be a Mennonite! I don't want to be a visible stand-aparter who everyone else thinks is a killjoy, etc, etc, and who is viewed as impossible to work with.

I want a clear enough curve so that dealing fairly with the customer is considered good business. That is, basically, I just want a well-functioning business.


Actually, at times, I have been viewed as an asset because I know how to get the computer to do things, so as give the list of exceptions to the 10% IRS penalty for early withdraw from a retirement account.

I think it is absurd to call banking an "industry" offering "products", and "the love of money" that is "the root of all evil" explains both the delusion and the deception as well as the seeming justification for ripping people off in yet one more way. The best credit score to have is none at all, thereby proving a wage earner is not enslaved to "the system" demanding worship. Credit unions are not always so bad, but viewing credit, aka "debt", as an asset in one's life is still insane.

The work environment you seek within such a system is not possible. To do good things rightly and well, there is no option but to be willing to be hated by this world.

Tax prep companies are generally less about helping the clients and more about making money off the various refund loan products. At the same time, the people who go to these places are there to get their refund money ASAP, so generally I guess they should know what they are getting into.

People can always adjust their witholding to avoid getting a big refund, although I usually don't bother to do so--I probably would if I were in a stable career but it's really looking like I am going to have a sporadic work history at least for a while, so a big refund can be useful if you are not employed for months on end. Counting on it to pay some penalties along with some other non-income related taxes.

And the following is not me saying it. This is from a 2006 news release from the office of the California Attorney General!

“H&R Block also participates with banks and other entities in a deceptive debt collection scheme under the banner of its RAL program, the complaint alleges. . . ”
http://ag.ca.gov/newsalerts/release.php?id=1261

And for the full legal language of the “COMPLAINT FOR
INJUNCTION, CIVIL PENALTIES AND OTHER RELIEF," Feb. 15, 2006, see:
http://ag.ca.gov/newsalerts/cms06/06-013_0a.pdf

We ask clients to sign a sheaf of approximately 50 pieces of paper. If there are land mines in that sheaf, it is my responsibility to inform the client.

Okay, as far as the ethics of different jobs, H&R Block is clearly in the lowest 10%. And there's a bunch in the sloppy middle. But, there are jobs which have an ethical environment. For whatever reason, and maybe just good luck, some jobs have built an ethical culture.

Earned Income Credit (EIC) can be some serious money. For a single parent or couple it can be up to $3,043 (one child); $5,028 (two children); or $5,657 (three or more children). It goes up the hill going higher with higher income for a little while, then hits a plateau and rides the plateau for a while, and then goes down the hill (although more slowly then it went up the hill). The actual number is given by an IRS table.

You can e-file for free through the IRS if you income is less than $57,000 (although you won’t get any earned income credit for an income that high!). They send you through your choice of tax prep company. I’ve read the companies attempt to sell you RALs and state filing. I have not done this myself.
http://www.irs.gov/efile/article/0,,id= ... ?portlet=8

The child needs to be your “qualifying child.” Usually, this is straightforward and you can trust your first reaction. It can potentially be complicated.

I’d be happy to teach EIC. However, I would want other people in there helping out, too, including looking up the needed references.

And, oh yeah, Earned Income Credit is a negative income tax and can be viewed as a form of welfare. It is, however, a self-administered form of welfare in that you’re not going to have someone supercilious sitting across a desk from you looking down there nose at you. It’s also been at least occasionally part of the political debate, raise minimum wage or raise the earned income credit? And it’s at least a partial response to the loss of good-paying manufacturing jobs in the United States ever since the early 1970s. I am in favor of it.

and for more on “cross-collection”---

IRS Taxpayer Advocate, June 30, 2006:
“ . . . if a taxpayer owes money on a defaulted RAL to Bank A and subsequently attempts to buy another RAL from Bank B, Bank B is authorized to collect the outstanding debt from the RAL proceeds, transmit the funds to Bank A, and provide the remaining balance to taxpayer, typically in the form of a refund anticipation check, because the existence of the outstanding debt rendered the taxpayer ineligible for the loan. . . ” (page 10)
http://www.irs.gov/pub/irs-utl/2007_obj ... _final.pdf

don’t let the crummy bank take your money