H&R Block to Settle FTC Lawsuit Alleging Deceptive Claims

H&R Block will pay $7 million and change some of its practices under a proposed settlement that would resolve a Federal Trade Commission (FTC) lawsuit alleging that the company made deceptive claims about “free” tax filing.

The FTC filed an administrative lawsuit against H&R Block in February, charging that the company advertised its online tax filing products as “free” even though many consumers could not file for free, the regulator said in a Tuesday (Nov. 12) press release.

The lawsuit also charged that the company did not clearly explain which of its products cover which parts of consumers’ tax returns, made it difficult for consumers to downgrade to a less expensive product, and, when consumers did downgrade, deleted data they had entered, according to the release.

“American taxpayers who seek tax-filing help should be able to choose the services they need — and know the truth about how much they’ll pay,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in the release. “The FTC’s action today will help lower the stress and expense of tax season for millions of taxpayers.”

Reached by PYMNTS, an H&R Block spokesperson said in an emailed statement: “H&R Block prides itself in providing consumers with quality online tax preparation products, which has never been an issue in this matter. We will continue to work through this process with the Commission. We are proud of the value, unmatched tax expertise, and fair and transparent pricing we provide to our clients, who have trusted H&R Block for nearly 70 years.”

Under the proposed settlement, the firm would be required to disclose in its “free” advertising that some or most taxpayers do not qualify for those products, allow consumers to downgrade products without contacting customer service, stop completely deleting consumers’ previously entered data, according to the release.

In another, separate case, it was reported Nov. 4 that Intuit, the software company behind TurboTax, took the FTC to court to challenge the regulator’s use of in-house administrative proceedings.

Intuit’s challenge stems from an FTC administrative order that found the company had misled customers by advertising its TurboTax software as free when the majority of users ultimately had to pay for services.