H&R Block Sued for Hiding Fees on Military Refund Loans

H&R Block marketed its Refund Advance Loan as 0% APR with no fees. A new federal lawsuit says that was never true for military borrowers. The hidden cost, plaintiffs argue, pushed the real rate well past the legal cap Congress set specifically to protect service members.

The case, Montgomery v. HRB Tax Group, Inc., was filed February 6, 2026 in the Southern District of California. It’s early. No class has been certified, and no settlement is on the table. A nearly identical lawsuit landed against TurboTax’s parent company six weeks later, which suggests this isn’t a one-company problem.

H&R Block Military Lending Lawsuit Timeline and Updates

2006 — Congress passes the law this case turns on

The Military Lending Act caps the total cost of most consumer credit to active-duty service members and dependents at 36%, expressed as a Military Annual Percentage Rate. The MAPR rolls in fees that an ordinary APR calculation would leave out. It also bans mandatory arbitration clauses for covered borrowers. Lawmakers passed it because predatory lenders had been targeting troops for years.

February 2024 — A separate FTC complaint, unrelated to military lending

The FTC charged H&R Block with making it hard for customers to downgrade to cheaper products, deleting their entered data when they tried, and advertising “free” filing in ways that misled people about who actually qualified. That case ran its course separately and predates the military lending allegations.

January 2025 — H&R Block settles with the FTC for $7 million

The FTC finalized an order requiring H&R Block to pay $7 million and overhaul its downgrade process and free-filing disclosures. This settlement has nothing to do with military lending or the MLA. It matters here only as background: it’s the most recent example of federal regulators finding H&R Block’s marketing didn’t match what customers actually got.

February 6, 2026 — Montgomery files suit

Joshua Montgomery, an active-duty service member, filed a class action in the Southern District of California. The complaint names H&R Block Inc., HRB Tax Group Inc., Pathward N.A., and Emerald Financial Services LLC as defendants.

March 2026 — The case starts drawing wider coverage

Coverage of the filing began circulating through class-action news outlets in March, with consumer comment sections filling up with H&R Block customers, military and civilian alike, describing fees they didn’t expect on refund advance products.

April 2026 — Intuit gets hit with the same theory

Here is where it gets complicated, in a way that strengthens the underlying argument. A nearly identical lawsuit was filed against Intuit, TurboTax’s parent company, alleging the same structure: a refund advance loan marketed as free or low-cost, with fees buried in required ancillary accounts that push the MAPR over 36% for military borrowers. The Intuit case names different bank partners, including MVB Bank, First Century Bank, and Green Dot Bank, but argues the identical theory against a different tax-prep company.

What the Lawsuit Alleges

This is the core allegation: H&R Block’s Refund Advance Loan is marketed as 0% APR and no fees. To actually receive the loan, the complaint says, borrowers had to open financial accounts through Pathward N.A., H&R Block’s banking partner. Those accounts carry their own charges.

According to the complaint, military borrowers were routinely charged a $39 refund transfer fee and a $25 check disbursement fee. Neither shows up in the headline “0% APR” pitch. Both, the lawsuit argues, are required as a condition of getting the loan at all.

Why does that distinction matter legally? Under the MLA, any fee for a product or service required as a condition of receiving credit must be folded into the MAPR calculation. It doesn’t matter whether the lender calls it a loan fee or an account fee. If you can’t get the loan without it, the law treats it as part of the cost of the loan.

Refund advance loans are short. Sometimes just a few weeks, until the IRS refund arrives. A $39 fee on a small advance, annualized over a few weeks instead of a full year, can spike the effective rate far past 36%, according to the complaint’s math. The shorter the loan, the more a flat fee distorts the annualized rate.

The complaint also targets H&R Block’s Emerald Advance Loan, a separate installment product with a stated APR of about 35.9%, just under the legal cap on paper. Plaintiffs argue that loan, too, requires Pathward-issued accounts, like an Emerald Prepaid Mastercard or a Spruce Spending Account, that carry their own fees and push the real MAPR over the line for covered borrowers.

What the Military Lending Act Actually Requires

Most readers have never heard of the MAPR until a case like this surfaces. It’s worth understanding because the entire lawsuit hinges on it.

That last line is the one with teeth. A loan that violates the MLA isn’t just subject to a fine. It’s void from the moment it was signed. The borrower has to repay what they borrowed, but the lender can’t collect interest or fees on it, and anything already collected has to be returned.

What H&R Block Knew And When

The complaint doesn’t allege H&R Block was unaware its loan products carried these fees. The fees are disclosed, just not folded into the advertised “0% APR” framing in a way that makes the real cost obvious to a borrower comparing options.

What matters here is the structure, not secrecy. Pathward N.A., formerly MetaBank, originates the loans and issues the required accounts. Emerald Financial Services manages the Emerald-branded products. The complaint frames this as a deliberate architecture: separate the headline rate from the account fees, market the loan as free, and let the required accounts generate revenue on the side.

Tax season creates unusual pressure. Refund advance loans exist because people want their money before the IRS sends it, often to cover an immediate need. That urgency is exactly the population the MLA was written to protect, since predatory short-term credit products have historically targeted financially stretched borrowers, including service members managing frequent moves, deployments, and unpredictable pay schedules.

This Is Now an Industry Pattern, Not a Single Case

The Intuit lawsuit filed roughly six weeks after Montgomery isn’t a coincidence of timing. It’s the same legal theory, aimed at a different company, using a different bank partner.

Both cases argue the identical mechanism: fees that look small in dollar terms become illegal once annualized over a loan that only lasts a few weeks. If that theory succeeds against one company, it has a clear template for the rest of the industry, since tax refund advance loans are structured similarly across most major tax-prep providers.

H&R Block’s Response

H&R Block has not issued a detailed public response to the Montgomery complaint’s specific allegations as of this writing. The company’s prior public statements, made in response to the unrelated FTC matter, framed its practices as already largely compliant or in the process of being updated, and expressed a preference to move past regulatory disputes rather than litigate them at length.

Pathward N.A. and Emerald Financial Services have not issued separate public statements addressing the military lending allegations specifically.

Who Qualifies to File

No claim form exists right now. This case hasn’t reached class certification, let alone a settlement. If a class is eventually certified, the complaint’s proposed class would likely cover:

You don’t need to be active-duty at the time you file. The MLA’s protections attach based on your status when the loan was made, not when a lawsuit reaches a resolution.

Filing Deadlines

There is no claim deadline to track yet, because there’s no settlement and no certified class. The relevant clock right now is the case’s own procedural posture: it was filed in February 2026 and remains in its earliest stage, with no indication yet of a ruling on a motion to dismiss.

Separately, the MLA itself carries its own discovery-based limitations period for bringing a claim, generally measured from when a borrower discovers the violation. If you believe you were affected, preserving your loan agreement, fee disclosures, and account statements now protects your position regardless of how this particular case proceeds.

Why These Cases Take So Long

This is the earliest possible stage of federal litigation. The defendants haven’t yet had to answer the complaint in a way that’s reached public reporting, let alone moved to dismiss it.

MLA violations carry a specific kind of computational fight: the dispute isn’t really about whether fees were charged, since they likely were. It’s about whether those fees should have been included in the MAPR calculation, and what the resulting annualized rate actually comes out to once they are. That kind of math-heavy dispute often invites dueling expert reports before a court reaches class certification.

None of that has happened yet here. Expect, at minimum, a year or more before any meaningful ruling on whether this case proceeds as a class action at all.

What This Lawsuit Teaches Consumers

The headline rate on a loan is not the same thing as the cost of the loan. That gap is exactly what the Military Lending Act was built to close, and exactly what this complaint argues H&R Block exploited.

For military borrowers specifically, the MLA exists because the same financial pressures that make a quick refund advance attractive, an unexpected move, a deployment, a tight budget between paychecks, also make borrowers less likely to scrutinize fine print on account fees. A “0% APR, no fees” pitch is designed to be read quickly. The law requires more than a quick read to be accurate.

The fact that a nearly identical case landed against a second major tax-prep company within six weeks should change how anyone reads “free” loan marketing during tax season, regardless of which company is offering it. If your loan required you to open a separate account, card, or spending product to receive the money, that account’s fees are not free just because the loan’s interest rate says zero.

For service members and dependents specifically, your MLA protections exist independent of whether this lawsuit succeeds. You can’t be required to arbitrate a dispute, you can’t be charged a prepayment penalty, and any loan that violates the MAPR cap is legally void against you, not just discounted.

This case sits alongside a broader pattern of financial products marketed as simple and free turning out to carry real costs once the full structure is examined. The Venmo fraud reimbursement lawsuit raises a related question: what a payment platform actually owes its users versus what its marketing implies.

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