Attorney General Lockyer Announces Settlement with H&R Block That Reforms Company's 'Peace of Mind' Guarantee, Provides Consumer Refunds

Consumers in 2001 Not Adequately Informed Service Optional

Thursday, April 24, 2003
Contact: (916) 210-6000,

(SACRAMENTO) – Attorney General Bill Lockyer today announced a multi-state settlement with H&R Block that will strengthen consumer protections in the tax preparation firm's sale of its "Peace of Mind" guarantee, and reimburse customers who were not properly informed they did not have to buy the service to get their returns completed.

"The settlement provides refunds to customers who paid for the Peace of Mind guarantee without being told by H&R Block the service was optional," said Lockyer. "The settlement also ensures that, in the future, H&R Block will properly inform consumers when marketing and selling this product."

The settlement requires H&R Block to provide $1 million to reimburse consumers who paid for the Peace of Mind guarantee during the 2001 tax season without giving their informed consent.

The settlement, called an "Assurance of Voluntary Compliance or Discontinuance," was reached between H&R Block, and 41 states and Washington D.C.

Under the Peace of Mind program, H&R Block guarantees that if one of its preparers errs in completing a return, and the mistake requires the customer to pay more taxes, H&R Block will pay up to $5,000 of any additional amount owed. The attorneys general and Washington D.C. allege that during the 2001 tax season, H&R Block automatically charged a $22 fee for the guarantee without first obtaining consumers' consent to buy the service.

To be eligible for a refund, consumers must have had a tax return prepared by H&R Block in the 2001 tax season, been charged an additional fee for the guarantee, never utilized the guarantee, and believe they were never informed that the guarantee was an optional service.

Consumers must apply for a refund no later than Friday, August 22, 2003. They can request a refund by calling a toll free number H&R Block has established, 866-522-7083 (available in English and Spanish), or by logging onto the H&R Block website created for customer refund requests, (for English) or (for Spanish).

Information about the refund claims process also is available on the regular H&R Block website,

Besides providing $1 million in consumer restitution, the settlement requires H&R Block to enhance consumer protections in the Peace of Mind program. The company must obtain consumers' affirmative consent before charging a fee for the guarantee. Additionally, H&R Block must disclose all terms and conditions of the guarantee before selling it, and cannot recommend that consumers buy the product before disclosing those terms and conditions. H&R Block also must clearly inform consumers that they have a right to cancel the guarantee within seven days from the date of purchase, and obtain a full refund for the fee.

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PDF icon 03-045.pdf135.26 KB
PDF icon 03-045.pdf135.26 KB