A federal judge in Chicago has upheld a class-action racketeering lawsuit against tax preparer H&R Block and consumer lender Household International. The suits accuse the companies of conspiring to trick poor customers into taking out high-interest tax anticipation loans.

The companies face potential treble damages that could run to billions of dollars if arguments by the plaintiffs' lawyers prevail in the case, which has been working its way through the courts since the late 1990's.

Judge Elaine E. Bucklo, in a 20-page decision, dismissed most of the counts against the two companies but upheld the two racketeering complaints. Judge Bucklo also eliminated a large portion of the 17 million-person class by ruling that arbitration clauses contained in many of the loan contracts signed by clients are enforceable.

The case began in February 1995, when the sole named plaintiff, Lynne A. Carnegie of New York, had a Block office prepare her taxes. Beneficial Finance, now Household International, made the loan in anticipation of her income-tax refund.

Millions of such loans are made each year for flat fees that equate to annual interest charges of several hundred percent and in some cases reach 2,000 percent.

Both sides claimed victory. Peter S. Linden, who represents Ms. Carnegie, said the judge's ruling was "a significant victory for the plaintiffs." He said the court "has sustained the plaintiffs' ability to sustain the racketeering claims against Block and Household, and those carry the potential for treble damages, so their exposure is very significant."

A Block spokesman said the company was pleased with the judge's ruling because it dismissed most of the counts regarding the refund anticipation loans.

Household declined to comment, though a spokesman noted the company has changed its lending policies in recent years and now clearly states that a refund loan is in fact a loan. Household remains the leading source of refund anticipation loans. It made 7.7 million of the 12.5 million such loans last year.

Last November, H&R; Block agreed to settle claims in Texas stemming from its failure to disclose a license fee it was receiving from the lending bank for the high-interest loans it marketed to its customers.

In Pennsylvania, an appeals court ruled earlier this year that lawsuits accusing Block of charging unnecessary fees for filing tax forms electronically can be treated as class actions and don't have to be arbitrated.