(CALIFORNIA) — Joshua Montgomery filed a proposed class action on March 10, 2026, in California federal court accusing H&R Block and partners of overcharging active-duty service members and covered dependents for tax refund advance products in violation of the Military Lending Act.

Montgomery sued HRB Tax Group Inc., H&R Block Inc., Pathward N.A., and Emerald Financial Services LLC, alleging charges tied to getting the advances should have been treated as credit costs under the law’s pricing limits for covered military borrowers.

At the center of the case are H&R Block’s Refund Advance Loan and Emerald Advance Loan, which the lawsuit says H&R Block markets as “no-fee” and “0% APR,” while steering borrowers into account and disbursement arrangements that generate charges.

Montgomery’s complaint targets what it describes as add-on structures that sit alongside tax preparation and the advance itself, including refund transfer arrangements and prepaid card pathways, as well as different ways of receiving funds that carry separate costs.

Under the suit’s theory, a service member seeking a quick advance against an expected tax refund could be required to use an ancillary account or refund transfer mechanism in order to obtain the product as advertised, even if that mechanism triggers extra fees.

The complaint frames those fees as functionally connected to extending credit, not as optional add-ons, because the borrower must use the associated account, transfer, or disbursement channel to get the advance.

Montgomery argues that the Military Lending Act requires lenders to include certain charges in the military annual percentage rate, or MAPR, when they are tied to obtaining credit, and that the law’s cap becomes especially important in short-term transactions.

The lawsuit points to a 36% MAPR cap and highlights a $39 refund transfer fee and a $25 check disbursement fee for check-issued funds, contending those charges must be counted when calculating the MAPR.

Because the advances can run for days or weeks, the complaint argues that even relatively small dollar charges can swell into a high annualized cost for smaller advances when measured under MAPR rules.

Montgomery also alleges a second category of Military Lending Act violations beyond pricing, contending that the agreements used with these refund advance products include terms the law restricts or prohibits for covered borrowers.

Among the challenged provisions are mandatory arbitration clauses, class action waivers, jury trial waivers, and “onerous legal notice provisions,” the complaint says.

The suit casts those terms as barriers that can deter or prevent service members and dependents from bringing claims, including by forcing disputes into individual arbitration and limiting group litigation.

Montgomery seeks to represent two nationwide classes: covered borrowers who took out an Emerald Refund Loan or similar product charged with finance charges, including refund transfer or check fees, and covered borrowers whose agreements included arbitration provisions, class waivers, jury trial waivers, or similar dispute terms.

Requested relief includes a jury trial demand, declaratory and injunctive relief, actual damages, statutory damages, and punitive damages for class members.

Class certification and the merits of the claims remain for the court to decide, and the filing does not report any settlement or resolution as of March 10, 2026.

The case arrives amid what the complaint describes as a broader run of Military Lending Act-focused scrutiny involving refund-related advance products offered through major tax preparation brands over the past five years, including probes of similar allegations involving H&R Block, TurboTax (Intuit), and Jackson Hewitt.

Those inquiries have examined whether terms such as arbitration clauses and missing disclosures render the agreements unlawful for covered borrowers, the complaint says, and it notes that non-compliant Military Lending Act loans are void ab initio.

Montgomery’s suit situates its claims in a longer history of disputes over refund-linked lending and marketing, pointing to earlier challenges to high-cost refund anticipation loans and alleged deceptive practices, including California AG Bill Lockyer’s 2000s action describing effective rates over 500%.

The complaint also references a more recent but unrelated federal action, noting that an FTC action in 2024 addressed different H&R Block practices such as data deletion on downgrades and misleading “free” filing ads, separate from the Military Lending Act allegations in this March 2026 case.