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FTC v. H&R Block: What You Should Know

by
Rebekah Barton
on
3/7/2024
FTC v. H&R Block: What You Should Know

Tax season can be stressful enough without wading through deceptive practices from tax preparation companies. The Federal Trade Commission (FTC) is cracking down on such practices, and the latest target is H&R Block. The FTC has taken action against the tax prep giant for unfairly deleting consumers’ tax data, requiring tedious hurdles for downgrading to more affordable products, and deceptively marketing their services as "free." These actions, asserts the FTC, have cost consumers time and money, leading to a significant outcry.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, expressed the FTC's stance on the matter in an official press release, stating, “H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products.”

The administrative complaint filed by the FTC alleges that H&R Block's online tax filing products steer consumers towards higher-cost options, often unnecessarily. Many consumers find themselves paying for more complex products than they need, leading to frustration and confusion. Worse still, when consumers attempt to downgrade, they are often met with a series of time-consuming challenges. H&R Block requires consumers to contact customer support and deletes all tax data entered, effectively starting the process from scratch. This practice creates a significant disincentive for consumers to downgrade and indicates a systemic issue within the company's operations.

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Credit: Michael M. Santiago/Getty Images

Furthermore, the complaint decries H&R Block's deceptive advertising practices, particularly regarding the promotion of "free" tax preparation services. While the company touts its services as free, many consumers discover that they do not qualify for the free option, leading to further frustration and mistrust.

H&R Block has defended its practices, with Dara Redler, the company's chief legal officer, telling CBS News that the company provides "fair and transparent pricing" and allows consumers to downgrade to less expensive options. However, the FTC's actions suggest otherwise, signaling a need for greater transparency and accountability in the tax preparation industry.

The FTC's action against H&R Block follows similar actions against other tax preparation companies, indicating a broader effort to protect consumers from deceptive practices during tax season. As the administrative process unfolds, consumers can only hope for a fair resolution that prioritizes their interests and holds companies accountable for their actions.

For instance, the agency’s claim against H&B Block comes approximately a month after it barred Intuit from advertising its well-known TurboTax product as free. The FTC deemed Intuit's practice deceptive, as many users ended up having to pay for the tax-filing software despite the advertised free offer.

Intuit has indicated its intention to appeal the ruling, calling the FTC’s decision “flawed” in a statement.

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Credit: LD/Getty Images

The issue at hand is not just about tax preparation. It's about consumer trust and the integrity of the marketplace. When consumers choose a tax preparation service, they expect transparency and fairness, not deceptive practices that lead to unexpected costs and wasted time. The FTC's actions against H&R Block send a clear message to the industry: companies must prioritize consumer interests and operate with integrity.

The complaint filed by the FTC outlines specific instances where H&R Block's practices have harmed consumers. One such instance is the requirement for consumers to contact customer support when attempting to downgrade their tax preparation products. This requirement, coupled with the deletion of tax data, creates a significant barrier for consumers seeking more affordable options. Moreover, the deceptive advertising practices employed by H&R Block further compound the issue, leading consumers to believe they are getting a "free" service when, in reality, they are not.

The consequences of these practices are far-reaching, affecting not only individual consumers but also the broader marketplace. When companies engage in deceptive practices, it erodes consumer trust and undermines confidence in the marketplace. This, in turn, can have negative implications for the economy as a whole. By holding companies like H&R Block accountable for their actions, the FTC is working to restore trust and integrity to the tax preparation industry.

In addition to the administrative complaint filed by the FTC, consumers affected by H&R Block's practices may also have legal recourse. Class-action lawsuits have been filed against companies engaged in similar practices, seeking compensation for affected consumers. These lawsuits remind companies that they cannot operate with impunity and must be held accountable for their actions.

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It is important to note that a class action lawsuit has not yet been filed in the H&R Block situation.

As the administrative process unfolds, consumers should remain informed about their rights. They should also be proactive in seeking redress if they believe they have been harmed by deceptive practices. By working together, consumers and regulatory agencies can ensure that companies like H&R Block are held accountable and that deceptive practices are permanently eradicated from the marketplace.

To be clear, all of the claims outlined above are allegations. Again, both H&R Block and Intuit have defended their practices and indicated they do not believe any wrongdoing occurred.

Feature Image Credit: Michael M. Santiago/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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