H&R Block, the nation's largest tax-preparation service, was accused yesterday of selling inappropriate savings plans to hundreds of thousands of income tax filers, in the latest attack on the company's push to offer other financial services.
The New York attorney general said in a lawsuit filed yesterday that the company steered clients, many of them low income, into individual retirement accounts that were "virtually guaranteed to lose money" because of low interest rates and high fees. The suit also contended that H&R Block did not fully disclose its fees.
"The conduct described in today's complaint is particularly appalling because many of those hardest hit were working families who struggle to save," Eliot Spitzer, the New York attorney general, said in a statement.
The company said it would defend itself against the allegations.
The firm has had similar legal troubles in other states, related to other "services" it offers to its clients:
[L]ast month, the company was accused by the California attorney general of illegally marketing and selling high-cost loans as "instant" tax refunds. The company agreed late last year to pay $62.5 million to settle four class-action lawsuits related to refund-anticipation loans.
Additionally, the law firm of Lerach Coughlin Stoia Geller Rudman & Robbins filed a class-action lawsuit in Kansas City, Mo., against H&R Block yesterday, citing similar accusations.
As I understand it, this firm's brand image is based around the idea of selling professional information labor -- knowledge of tax laws, expertise in bureaucratic government procedures, and facility with mathematics -- to two market segments: (1) household and small-business consumers who feel they lack such information knowledge and skill to the degree that they are either unable or unwilling to complete their government-mandated tax forms themselves; and (2) household and small-business consumers who feel they _could_ prepare their own taxes, but trust the expertise of the firm to bring them greater savings on their taxes than they themselves would be able to reap.
In light of the lawsuits, it seems to me that this firm is, in a way, exploiting the "information ignorance" of its clients (not the best term, but bear with me) in two ways: first, it relies on clients who don't feel competent or comfortable in preparing their tax forms on their own; and second, it relies on clients who won't question the fine print of "instant refund" and "long-term savings" plans which, according to the lawsuits, are little more than high-interest and high-fee loan-sharking schemes.
This line of analysis got me to thinking about some of the other organizations and institutions in our political-economy which rely on, profit from, and perhaps even work to reproduce, this "information ignorance" in its various forms -- not just lack of information about and familiarity with legal and bureaucratic knowledge and procedures, but various fundamental "illiteracies" such as mathematical illiteracy, print illiteracy, media illiteracy, computer illiteracy, scientific illiteracy, and the like. For example, for all their talk about being part of the "entertainment" industry, I believe that gambling/gaming firms (and state-backed lotteries as well) require a certain amount of mathematical illiteracy among their markets in order to entice consumers to give over their money to a "house" which nearly always wins. Ponzi schemes, "multi-level marketing" firms, and get-rich-quick "informational seminars" of all sorts rely upon mathematical illiteracy of a different sort.
More than the fringes of the economy such as loan-sharking, gambling, and pyramid schemes are implicated here, though. Sometimes profiting from "information ignorance" might mean engaging in the organized concealment of product and price information from consumers, such as in efforts of the real-estate industry to keep the "multiple listing service" operating as a closed system (perhaps akin to the failed defense of closed systems of travel agents and stock brokers a decade ago). Multinational corporations like Wal-Mart or McDonald's which rely on an advertising image of "home town connection" have no interest in revealing the true global nature of their commodity, labor, and profit flows; neither do they work reveal the conditions under which their products are produced, marketing instead the single-minded benefits of "low price" or "great taste" to their consumers. In other words, "commodity fetishism" is in itself a form of information ignorance -- ignorance of the space and time, material and labor, conditions of production of commodities.
Once we extend the definition of "information ignorance" in these ways, though, certainly such profit-seeking firms aren't the only ones to blame. Ignorance can perhaps be a willful state to exist in on the part of consumers, or a convenient condition to foster on the part of the state. I like to think that our institutions of education -- from mandatory public schools to competitive private unversities -- have as their core mission the elimination of such ignorance, not only among their immediate clients (students), but throughout the societies in which they operate. Other civic institutions, like public libraries and public media, seem to share such values. Private information agencies and media outlets depend on the existence of the particular market segments that they target, so may be in a more contradictory position. Some might reap increased revenues from an audience hungry for knowledge; others might depend for their revenues on an audience deprived of experience.
In all of this analysis, however, I'm not sure I'm really comfortable with the terms "ignorance" and "illiteracy". They seem too monovocal -- "you are ignorant if you don't know what I know, or believe what I believe, or make decisions in the way I make decisions" and all that. But if there's a new and useful way to connect disparate forms of "information prodution" and "information consumption" together through an analysis of the power position of both the producers and the consumers -- getting beyond "owning the means of production" vs. "willing to pay for products and services" and instead delving into the specific conditions for knowledge valuation, production, and reproduction in society -- then I'm willing to play with those ideas for a while to see where they lead.