The Checkout

Don't Miss This

My colleague, Brooke Masters, has posted a story you shouldn't miss:

H&R Block, the nation's largest tax preparation service, defrauded hundreds of thousands of customers by encouraging them to invest their tax refunds in individual retirement accounts without disclosing that high fees meant most small investors would lose money, New York Attorney General Eliot L. Spitzer alleged in a civil lawsuit Wednesday.

H&R Block denied the charges, saying it has helped 590,000 clients begin saving for their future. The company said that 78 percent of its customers ended up ahead, once the tax savings involved in opening an IRA are included along with the interest.

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By  |  March 15, 2006; 4:50 PM ET Consumer News
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I can't resist pointing out the irony in the other recent story about H&R Block: they have had to restate their own tax filings "because of errors in calculating its state effective income tax rate. The mistakes resulted in H&R Block understating its state income tax liability by about $32 million as of the end of April, 2005." But I'll bet their associates didn't make the same IRA investments they were suggesting for their clients.

Posted by: Nell | March 15, 2006 8:44 PM

Eliot L. Spitzer should think about being a candidate for the next presidential election. He could apply his energy to our society problems.

Posted by: Joe | March 16, 2006 8:35 AM

I opened an IRA at Washington Mutual and the annual fees exceeded the interest that I earned on it. Even worse my kids opened small IRA's at Salomon Smith Barney (because Washington Mutual would not set one up for anyone under 18) and were each charged $50 annually. It not only wiped out their interest, but also eroded most of their capital. (Morgan Stanley also charges $50 annually.) SSB absolutely DID NOT disclose the fee because we would not have set up the IRAs had we known. WM may have told me about the fee but did not tell me that it would eat up most of my interest. So tell me, why isn't Spitzer going after them? Because HRB is an easy target?

Posted by: dg | March 16, 2006 10:26 AM

to dg: Spitzer's probe was prompted by insiders from HRB blowing the whistle on them, which would be why the target of the probe was HRB & not SSB.

Posted by: aa | March 16, 2006 11:25 AM

Scottrade offers free Roth IRA accouts.

Posted by: MAZURY | March 16, 2006 11:27 AM

Why would anyone be surprised? This is the same firm that pushes its customers into essentially usurious refund anticipation loans.

Posted by: J-Man | March 16, 2006 12:12 PM

Elliot Spitzer is a politically-motivated headline grabber and a hypocrite. He picks his battles fro maximum public exposure, then issues his press releases and counts on the fact that uneducated consumers will think he's "protecting" them, rather than simply executing a strategy designed to take him to the NY Governmors mansion.

Rather than try to argue the facts here, I invite all to read the following article in Forbes:

And one other thing: dg -- here's some unsolicitted financial advice -- maybe IRAs weren't the wisest investment vehicle for your minor children in the first place.

Posted by: Spitzer's No Hero | March 19, 2006 5:25 AM

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