Five consumer groups urged federal regulators Wednesday to reject H&R Block Inc.’s application to open a savings bank that the activists contend could be used to gouge consumers.

Block said it wanted to open the savings bank, which would be based in Kansas City, to provide a low-cost banking alternative to its tax service clients and others who currently do not use traditional banks much.

The consumer groups, led by the California Reinvestment Coalition in San Francisco, fear that opening a bank would make it easier for Block to market costly tax refund loans and subprime home mortgages in low-income neighborhoods. They also contend that a planned single bank in Kansas City would allow Block to pull clients’ money out of communities throughout the nation without reinvesting some of it as federal law requires.

“If H&R Block wants to be a bank, it should get out of the business of brokering predatory refund anticipation loans to working poor families,” said Chi Chi Wu, a staff attorney with the National Consumer Law Center, which also is a member of the coalition that addressed Office of Thrift Supervision regulators Wednesday in Dallas.

“It should be providing low-cost savings accounts so families can get their refunds quickly and safely,” Wu said.

The Community Reinvestment Association of North Carolina, Inner City Press/Fair Finance Watch and the Woodstock Institute also participated.

Block denies any intention to gouge tax service clients or other customers.

“The plans we’ve submitted to the Office of Thrift Supervision are very specific,” said David Gunasegaram, a Block spokesman.

“We have no plans to offer refund loans through the bank. Internal Revenue Service regulations prohibit us from originating them. We have no plans to make subprime loans,” Gunasegaram said.

Block has made refund loans available through its tax offices for years, and many clients have filed class-action and other lawsuits over fees and other loan terms. The company has successfully defended some of the complaints and settled others, including a Texas lawsuit in 2003 for nearly $44 million.

And while the planned Kansas City bank would not make subprime loans, Block’s Option One mortgage unit, which generates significant income and revenue for the company, specializes in lending to borrowers with checkered credit histories.

Company officials have declined to share many details of the planned bank until the OTS and other regulators approve the proposal. Block’s current charter application, filed in May, is the third the company has filed since 2002. Block withdrew the previous two applications to re-evaluate them and make sure the proposals best fit both Block’s needs and its clients’, Gunasegaram said.

Chairman Mark Ernst told securities analysts in June that the company had applied for a charter for a single Kansas City bank to provide both nontraditional low-cost banking services for clients and a depository for customers’ funds.

The plans represent a huge expansion for Block. The company already tends more than $1 billion of its customers’ money, which includes funds in investment accounts at its financial services arm, mortgage deposits generated by its home loans and retirement savings in individual retirement accounts that tax customers have opened.

Block currently relies on other banks to help hold customers’ deposits. Having a charter, and consequently the ability to deal exclusively and directly with depositors, would allow the company to keep more of the income that business generates instead of sharing it with partners.

Shares in Block closed Wednesday at $23.52, down 22 cents.