H&R Block Faces FTC Scrutiny Over Deceptive Tax Service Practice

FTC is cracking down on H&R Block for allegedly deleting tax data when users try to downgrade their services. The agency claims that while the company made upgrades seamless, it created obstacles for downgrades, leading consumers to overpay.

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NEW YORK, NEW YORK - FEBRUARY 06: An H & R Block tax preparation signage is seen on Flatbush Avenue on February 06, 2024 in the Prospect Heights neighborhood of Brooklyn borough in New York City.

Cracking Down H&R

The Federal Trade Commission (FTC) has taken a stern stance against tax preparation giant H&R Block, alleging that the company engaged in deceptive practices that disadvantaged consumers.

According to the official press release, H&R Block made it easy for users to upgrade their services seamlessly but imposed significant obstacles for those seeking to downgrade, resulting in customers paying more than necessary.

The agency's administrative complaint, which parallels a lawsuit, signifies the initiation of formal proceedings before the FTC's administrative law judge.

If the allegations hold true, H&R Block may face the possibility of appeals in federal court, potentially leading to significant repercussions for the company. This underscores the FTC's commitment to safeguarding consumer rights and ensuring transparency and fairness in the marketplace.

H&R Block's alleged actions highlight the importance of stringent oversight and enforcement measures to protect consumers from deceptive marketing tactics and unfair business practices.

FTC has accused H&R Block of employing deceptive tactics by making it cumbersome for customers attempting to downgrade their services. Allegedly, the company would redirect customers to contact customer support, only to subsequently erase all their tax data, necessitating a restart.

This strategy, as noted by the FTC in a press release, effectively dissuaded customers from downgrading. Conversely, when customers sought to upgrade, H&R Block purportedly transferred their data seamlessly.

Furthermore, the FTC contends that H&R Block misrepresented its tax preparation services as "free," despite the fact that many users did not qualify for these free services.

Previous Allegations

H&R Block has faced previous allegations of directing customers towards pricier options. In 2019, an investigation from ProPublica revealed its involvement, along with other tax preparation services, in withholding its free offering from Google search results.

Last year, the company attracted the FTC's scrutiny after the agency cautioned five tax prep services about potential civil penalties for utilizing consumer data, such as for advertising, without prior consent. This followed a Markup investigation that uncovered sensitive financial data being transmitted to Facebook through its advertising pixel.

At that time, an H&R Block spokesperson stated the company regularly evaluates its practices to uphold privacy standards. The commission, currently led by Democrats, unanimously voted 3-0 to issue the complaint.

Dara Redler, H&R Block's chief legal officer, emphasized in a statement to The Verge via email that the company provides "multiple mechanisms" for customers to downgrade their products while ensuring accurate tax preparation.