What Is an Express IRA?
H&R Block offers financial products, including its version of an individual retirement account (IRA). Until 2010, the company offered a product it called an Express IRA. However, a class action lawsuit filed by the law firm Gerard Gibbs in the United States District Court for the Western District of Missouri alleged that H&R Block's Express IRA charged such high fees, and offered such a low rate of return, that consumers lost money on their investment.
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High Fees
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The class action suit brought by Gerard Gibbs in April 2006 claimed that H&R Block provided customers with misleading information about Express IRAs. For instance, H&R Block stressed the convenience of opening an Express IRA--but the fees were steep. Charges included a fee to open the account, maintenance fees to keep the account open, and a fee to deposit money. The class action suit went even further, alleging that H&R Block intentionally misled people, knowing customers would lose money.
Low Interest Rates
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H&R Block also advertised that Express IRAs had great interest rates. The class action suit, on the other hand, alleged that H&R Block had a deal with the Reserve Management Corporation, a company that invested customers' IRA funds in a money market account. As part of the deal, H&R Block was entitled to keep a percentage of the accounts' earnings--a fact not disclosed to consumers, according to the suit.
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Settlement
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In March 2010, H&R Block settled the class action suit out of court for $19.4 million but denied accusations that it misled customers. According to the H&R Block Express IRA Class Action Settlement Notice, anyone who had an Express IRA account at any point is eligible to receive a portion of the settlement by submitting an application by July 30, 2010. Those who do not wish to be a part of the suit or receive money have the right to exclude themselves and pursue a separate lawsuit.
Compensation
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Those who choose to be a part of the suit can submit a claim for any account fees they paid on or before January 25, 2010, plus 5 percent interest on those fees calculated from the time they were paid. Account fees include maintenance, transfer, opening, recontribution and termination fees.
Easy IRAs
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H&R Block no longer offers Express IRAs--the company converted its remaining Express IRA accounts to Easy IRAs, even for those who exclude themselves from the class action lawsuit. According to information on H&R Block's website, there is no fee to open an Easy IRA account, nor are there recontribution fees or annual maintenance fees. As of 2010, there is a $25 fee for terminating an Easy IRA, a $15 fee to transfer the funds to another bank and a $25 fee for a "Priority Check Disbursement."
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References
Resources
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