RICHMOND, Va. (AP) -- 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 it to pay more than $500,000 to an upstart rival for using deceptive advertising in its refund anticipation loan program.
Block has been sued before over its advertising for refund anticipation loans, in which tax filers receive bank loans for the amount of the refund they expect to receive from the Internal Revenue Service. 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 for a no-charge, refund anticipation loan 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.
Jackson ordered H&R Block to pay Liberty Tax Service $507,477, representing a portion of Block's profits in Hampton Roads in 2000.
The company said it has discontinued the product because it was not profitable.
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