A federal judge has turned down Jackson Hewitt's request to have a class-action lawsuit dismissed against the company and some of its franchises.

The plaintiffs, Dana Watts and Yadira Mosquera, alleged deceptive pricing practices in the sale of tax prep services at a Jackson Hewitt franchise in Brooklyn. They complained that they were deceived by misleading minimum prices and were overcharged by undisclosed fees hidden in their non-itemized bill.

In the complaint, the plaintiffs claimed that they and similarly situated customers were defrauded by the franchise's practices, which include an automatic 15 percent "multiplier fee" above the posted minimum fees. They complained that they were charged for the more expensive New York State long form despite their eligibility to file cheaper short form returns. They also said Jackson Hewitt buried additional hidden fees for financial products such as refund anticipation loans and accelerated refund checks within the overall tax preparation fee when these fees ought to have been separately disclosed. Jackson Hewitt did not respond to a request for comment.

In their motion to dismiss, the Jackson Hewitt franchisees acknowledged charging the multiplier fee, but also pointed out several inaccuracies in the plaintiffs' itemization of their bills. However, the judge dismissed the franchisees' argument that they were covered by a disclaimer that appeared on their fliers.

"The defendants' attempt to find protection in the disclaimer language is severely weakened by other facts alleged about their general business practice," wrote U.S. District Judge Dora Irizarry. "Even if the disclaimer is deemed to give effective notice of possible fee variations, it appears very difficult for customers to determine how much their tax preparation fee could vary from the posted minimums."

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access