H&R Block Military Lending Lawsuit Filed—Active-Duty Service Members Say Tax Refund Loans Violate 36% Interest Cap Under MLA
A class action lawsuit filed February 13, 2026, alleges H&R Block and co-defendants Pathward N.A. and Emerald Financial Services offer two short-term “payday-style” loans—the Refund Advance Loan and Emerald Advance Loan—to active-duty military service members with high fees and waivers that violate the Military Lending Act (MLA).
If you’re active military and took out a tax refund loan or Emerald Advance through H&R Block, you may have been charged interest rates far above the 36% legal limit for servicemembers. The lawsuit claims these loans aren’t just expensive—they’re illegal under federal protections designed specifically to shield military families from predatory lending.
What the Military Lending Act Prohibits
The MLA provides that a creditor cannot extend consumer credit to active-duty military service members or their dependents with a military annual percentage rate (MAPR) of over 36 percent.
This isn’t a suggestion—it’s federal law enacted in 2006 and strengthened in 2016 specifically to protect those who serve from the predatory lending practices that have historically targeted military communities near bases.
Per the complaint, the MAPR explicitly includes “application fees, participation fees, fees for ancillary products required to obtain credit and fees imposed in connection with a transaction for consumer credit.”
This means H&R Block can’t dodge the 36% cap by calling fees something other than “interest.” When you add up all the costs—application fees, tax prep fees bundled with the loan, and any other charges required to get the credit—the total cannot exceed 36% annual percentage rate.
The Two H&R Block Products Under Fire
Refund Advance Loan: The H&R Block Refund Advance Loan product is marketed as a way for borrowers to access tax refund money prior to receiving their refund. You file your taxes at H&R Block, they calculate your expected refund, and they offer you a loan for part of that amount right away instead of waiting for the IRS.
Sounds convenient—but the lawsuit alleges these loans come with a web of fees that, when properly calculated as annual percentage rates, far exceed what’s legal to charge military borrowers.
Emerald Advance Loan: This is a revolving line of credit offered through H&R Block’s Emerald Card prepaid debit card. Military members can borrow against future tax refunds throughout the year, creating what critics call a debt trap similar to traditional payday loans.
Both products allegedly include mandatory arbitration clauses and class action waivers—provisions that are explicitly illegal under the MLA when charging military borrowers.
Why This Matters to Active-Duty Service Members
Similar to cases like the $5.2M Albert Instant Settlement Ends Class Action Lawsuit Over Allegedly Illegal Payday Loan Fees which resolved claims that cash advance apps violated MLA protections, this H&R Block lawsuit targets the all-in cost of credit.
Under the MLA, it is unlawful for a creditor to require borrowers to submit to mandatory arbitration or waive their right to legal recourse under any other applicable state or federal law.
Even if H&R Block’s stated interest rate looks reasonable, the lawsuit claims hidden fees push the true cost far beyond legal limits. And by including arbitration clauses, H&R Block allegedly tried to prevent military borrowers from exercising their legal rights through lawsuits—another direct violation of MLA.
Who Qualifies as “Military” Under This Protection
The Military Lending Act protects:
- Active-duty service members in all branches
- Members of the National Guard on active duty for more than 30 days
- Reserve members on active duty for more than 30 days
- Spouses and dependents of covered service members
You don’t need to prove you’re currently deployed or stationed overseas. If you were on active duty when you took out the loan, you’re protected.
What Makes These Loans “Payday-Style”
In 2016, the Military Lending Act was expanded to cover most consumer loans. Under the updated law, payday loans and deposit advance products like cash advances are now subject to the same interest rate cap and regulations as other consumer loans extended to military borrowers.
The H&R Block products function like payday loans because:
- Short repayment period (paid when tax refund arrives)
- Loan amount tied to income (your tax refund)
- Fees structured to obscure true interest cost
- Marketed to people needing quick cash before payday (or tax refund)
Traditional storefront payday lenders can charge civilians 300-800% APR in many states. But they cannot charge military borrowers more than 36% under federal law—and the lawsuit alleges H&R Block tried to get around this by calling their products “tax refund advances” instead of payday loans.
Current Lawsuit Status (February 2026)
The case was just filed on February 13, 2026. It’s in the earliest stages with no settlement, no class certification, and no claim forms available yet.
However, military members who believe they were affected should:
Document everything now. Gather H&R Block tax preparation receipts, Refund Advance or Emerald Advance loan documents, account statements, and any correspondence showing fees charged.
Calculate your true APR. Add up all fees—tax prep, loan fees, card fees, any other charges required to get the loan. Divide by the loan amount, then annualize based on how many days you had the loan. If it exceeds 36%, you may have a claim.
Verify your military status during the loan period. Locate your military orders, LES (Leave and Earnings Statement), or DD Form 214 showing you were on active duty when you took out the loan.
What Compensation May Be Available
While no settlement exists, similar MLA violation cases have resulted in:
- Full refund of interest and fees paid above the 36% cap
- Voiding of loan agreements found to be illegal
- Statutory damages for willful violations
- Attorney fees and costs
The $5.2 million Albert Instant settlement mentioned earlier provided payments to affected military members for similar MLA violations. Once this H&R Block case progresses, compensation structures will become clearer.
How to Participate (When the Time Comes)
You don’t need to hire a lawyer right now. Class action lawsuits work by having attorneys represent all similarly situated people. If the court certifies a class, you’ll automatically be included if you meet the criteria unless you opt out.
For now, preserve your documentation. When claim forms become available—likely 12-24 months from now if a settlement is reached—you’ll need proof of:
- Your military service during the loan period
- H&R Block loan documents
- Fees and interest charged
- Payment records
Your Rights Under the Military Lending Act
Beyond just the 36% interest cap, the MLA provides several protections:
No mandatory arbitration clauses. Lenders cannot force you to give up your right to sue.
No class action waivers. You must be allowed to participate in class action lawsuits.
Clear disclosure requirements. Lenders must provide a specific statement of MAPR in writing before you take out the loan.
No prepayment penalties. You can pay off the loan early without additional fees.
No mandatory allotments. The lender cannot require you to set up automatic military paycheck deductions.
If H&R Block violated any of these provisions, not just the interest rate cap, affected military members may have legal claims.
Where This Lawsuit Fits in a Larger Pattern
November 14, 2025: A class action lawsuit alleges that True Finance often traps military servicemembers in cycles of debt through illegal payday loans. April 11, 2024: OneMain Financial has been hit with a class action that claims the lender has extended unlawful loans to thousands of active-duty servicemembers. March 21, 2024: A class action lawsuit alleges Wells Fargo has illegally charged thousands of American servicemembers and military families excessive interest rates and fees.
The H&R Block lawsuit is part of an escalating wave of legal action enforcing MLA protections. Financial services companies have increasingly faced scrutiny over creative fee structures that technically comply with state law but violate the stricter federal protections for military borrowers.
What You Should Do Now
If you’re active military and took out H&R Block tax loans:
Stop using these products. Consider switching to free tax filing through Military OneSource or IRS Free File if you qualify.
Calculate whether you paid more than 36% APR. Be thorough—include every fee H&R Block charged in connection with getting the loan.
Save all documentation. Even if you’ve paid off the loan, you may be entitled to recover excess fees paid.
Report violations. File a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint and with your service’s legal assistance office.
Monitor case developments at www.classaction.org or through the law firm handling the case (check court records for attorney contact information).
Frequently Asked Questions
What is the H&R Block military lending lawsuit about?
The February 13, 2026, lawsuit alleges H&R Block’s Refund Advance and Emerald Advance loans charge military members interest rates exceeding the 36% cap mandated by the Military Lending Act through excessive fees and charges bundled with the loans.
Am I eligible if I’m a veteran or reservist not on active duty?
The MLA protects active-duty service members and their dependents. Veterans and reservists not on active duty orders generally aren’t covered unless they were on active duty when they took out the loan.
Is there a deadline to join the lawsuit?
No claim deadline exists yet since no settlement has been reached. The lawsuit was just filed and is in early litigation stages. Class certification could take 12-18 months.
What documentation do I need?
Gather your H&R Block tax preparation documents, Refund Advance or Emerald Advance loan agreements, account statements showing all fees, payment records, and proof of military service (LES, military ID, or orders) during the loan period.
Can I still file taxes with H&R Block while this is pending?
Yes, but avoid taking their Refund Advance or Emerald Advance products if you’re active military. Use free tax filing options or pay cash for preparation services without bundled loans.
Last Updated: February 15, 2026
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance on your specific situation, consult with JAG legal assistance or a qualified attorney.
Know your rights: The Military Lending Act exists specifically to protect service members from predatory lending. When major companies allegedly violate these protections, holding them accountable ensures military families aren’t exploited while serving our country.
Stay informed, stay protected. — AllAboutLawyer.com
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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