| Option One Parent Challenged for Cross Marketing IRS Referrals
Tax preparation users solicited for mortgages March 27, 2003 By PATRICK CROWLEY |
| A coalition of consumer groups has asked for a federal investigation into how one of the nation’s leading subprime lenders is receiving sales leads through the Internet Web site of tax preparer H&R Block.The groups allege that Block is using confidential information provided by low-income taxpayers who use the company’s tax preparation services offered on the Internal Revenue Service Web site.
With the taxpayer’s consent Block then uses that information to market mortgages through H&R Block Mortgage as well as Option One Mortgage Corp. of Irvine, Calif., a leading subprime housing lender and Block subsidiary. Five consumer groups, including the Consumer Federation of America (CFA), have asked the IRS and Treasury Department to investigate. In a joint written statement issued Wednesday afternoon by the IRS and Treasury Department federal officials said the IRS will “review” the claims “to ensure that there are no violations.” “Commercial preparers are using a government sponsored program to gather the most intimate financial details that a consumer can have — information on a tax return — so they can sell these taxpayers all sorts of unrelated products,” said Jean Ann Fox, Director of Consumer Protection for the CFA. “This is a gross violation of the privacy of these taxpayers,” Fox said. In written statements, Block said it is following federal law that allows companies to cross-market products offered by its various units. Block called the consumer groups’ claims “inaccurate.” “No client is required to purchase any product or service as a condition to use H&R Block’s” services, the company said. “Clients are able to opt out of receiving such (marketing) information.” In a letter to the Treasury Department, the consumer groups called for tax preparers such as Block to be prohibited from marketing mortgages and other financial services to users of the IRS Free File program. Free File is designed to encourage computer filing of tax returns by taxpayers making $34,000 or less a year. Taxpayers using Blocks Free File are asked if they want information about mortgages. “Block secures its clients’ consent before providing tax-related mortgage and financial advice during the online tax process and sharing the clients’ tax information with H&R Block Mortgage,” Block said. But ultimately that information is filtered to Option One, the consumer groups charge. “We are especially concerned that confidential tax information is being used to sell mortgages, including potentially high cost subprime mortgages,” said Chi Chi Wu, staff attorney with the National Consumer Law Center, another one of the consumer groups. “Some of the Free File taxpayers who are sold mortgages may end up with subprime mortgages, which present the potential for high costs and risks for these taxpayer,” Wu said. Wu said she knew of at least two predatory lending lawsuits involving Option One. Block did not comment on the lawsuits. But the company did say that only users who have consented to receive information are contacted about mortgages. “In any case,” the company said, “the online tax program never sells mortgages. H&R Block Mortgage offers FHA, prime and subprime mortgages.” |
|
Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. |
