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FTC TARGETS H&R BLOCK FOR DELETING CUSTOMER TAX PREP DATA


By
Diccon Hyatt

Full Bio
 * 

Diccon Hyatt is an experienced financial and economics reporter who has covered
the pandemic-era economy in hundreds of stories over the past two years. He's
written hundreds of stories breaking down complex financial topics in
plainspoken language, emphasizing the impact that economic currents would have
on individuals' finances and the market. He's also worked at The Balance, U.S.
1, Community News Service and the Middletown Transcript.
Learn about our editorial policies
Published February 23, 2024
 * 
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 * 



Michael M. Santiago / Getty Images


KEY TAKEAWAYS

 * The Federal Trade Commission (FTC) filed a complaint against H&R Block
   Friday.
 * Regulators allege that the company made it hard for customers to downgrade
   services.
 * The complaint also alleges H&R Block advertised “free” tax prep services
   without making it clear that most taxpayers don’t qualify.
 * The FTC’s move is the government’s latest in a series of actions against the
   tax prep industry.

In their latest move against tax prep companies, federal regulators accused H&R
Block (HRB) of deliberately deleting customer data and airing misleading ads for
free tax filing services. 



The Federal Trade Commission (FTC) filed a complaint against the firm Friday,
saying the company made filing difficult for customers who started filling out
their tax returns with a more expensive service than they needed and then tried
to switch to a cheaper option.1 The company required taxpayers to contact
customer service to make the switch and then would delete all the information
they entered, forcing them to start all over again.



“H&R Block designed its online products to present an obstacle course of tedious
challenges to consumers, pressuring them into overpaying for its products,”
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a
press release. “Today’s action demonstrates that companies using coercive
techniques that harm consumers can expect to hear from the FTC.”



The FTC, a government consumer watchdog agency, also accused the company of
advertising “free” tax prep services without making it clear that most taxpayers
don’t qualify for the company’s free services and would have to pay. The
allegations are similar to those the FTC and state attorneys general have made
against Intuit's (INTU) TurboTax, which resulted in Intuit paying a $141 million
settlement to the states. Intuit is disputing the FTC’s complaint. 



H&R Block denied its pricing and services were unfair to customers.



“We believe we provide our clients with a great deal of value, unmatched tax
expertise, and fair and transparent pricing,” said H&R Block Chief Legal Officer
Dara Redler in a statement. “H&R Block allows consumers to downgrade to a
less-expensive DIY Product via multiple mechanisms while ensuring the
preparation of accurate tax returns.”



The FTC’s move is the government’s latest in a series of actions against the tax
prep industry. On top of the regulatory actions by the FTC, the IRS is launching
a pilot version website that allows taxpayers to file their federal returns
online directly to the tax agency this tax season, bypassing the need for
third-party tax prep software.



Consumer advocates and some politicians have long argued that taxpayers should
be able to file their taxes online for free without a tax prep service acting as
a middleman, similar to how filing works in many other countries. Previous
government efforts, such as the little-known and seldom-used “Free File”
program, worked with the private industry to offer free filing services to
people with annual incomes of $79,000 or less.



The Inflation Reduction Act, signed by President Joe Biden in 2022, changed that
approach and gave the IRS funding to set up an online tax filing service for the
first time in its history.


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Article Sources

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 1. Federal Trade Commission. "FTC Takes Action Against Tax Prep Company H&R
    Block For Wiping Consumers’ Data, Deceptively Marketing ‘Free’ Online
    Filing."



Related Articles

What's the Early Reaction to the New IRS Free Online Tax Filing Service?



Why You Might Want To Wait Until March To File Your Taxes This Year



Those TurboTax 'Free Free Free' Tax Filing Ads Were Misleading, Judge Rules



5 Biggest Lawsuits in 2023 That Could Hit Your Wallet



Intuit's (INTU) 'Free' TurboTax Software Accused of Misleading Consumers



Can AI Do Business Taxes? Benefits, Limitations, and Current Uses

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