FTC Sues H&R Block Due to Deceptive Practices

As tax season approaches, millions of Americans gear up for the lengthy, frustrating, and often tiring work associated with sorting and filing their taxes with the right company. Every year, some filers have reported that it can take them hours, if not days, in order to properly vet which services work best for their needs and if they can afford to render its services. If that wasn’t stressful enough, now many filers this year have noticed they’ve been set back even further as a particular tax filing company allegedly used deceptive sale practices to lure them in, only to delete their tax data after opting into a more affordable filing option.

On February 23, 2024, the Federal Trade Commission (FTC) filed a complaint against the tax company H&R Block, Inc., HRB Digital LLC, and HRB Tax Group, Inc. (collectively “H&R Block”), which alleged it violated the provisions of the Federal Trade Commission Act by using deceptive sales practices on its customers. 

According to the complaint, H&R Block has forced its customers to make impossible decisions, as when they’ve nearly completed filing, they are then prompted to decide on whether or not to pay unexpected fees. If the filers were to choose to go the route of downgrading to a lower-cost tax-preparation option online, they must then contact customer service to provide the service and eventually are forced to re-enter all the tax data they had put in initially as their progress was wiped completely from the system.

The FTC holds that it is impossible for the wipe to be a glitch in the system and that H&R Block is intentionally placing its customers in this position to pressure a sale. On page 15 of the document, it states, “In numerous instances, Respondents have coerced consumers into purchasing more expensive Online Products than they need or want by requiring consumers to spend time either calling or chatting with H&R Block’s customer service department to downgrade an Online Product to a less expensive one.”

The complaint also alleges that H&R Block has used deceptive tactics for years, stating that some of H&R Block’s advertisements promote the “Free Online Product” from at least 2018 to 2020. Certain H&R Block video advertisements also marketed “Free Online as free with no limitations, disclosures, or disclaimers.”

What Does H&R Block Mean by “Simple” or “Free”

On page 6 of the complaint, it shows evidence in its claim and as H&R Block has used an extensive TV and online campaign to deceptively market its services as “free” – as in “nada. . . zip. . . zilch” – when the services were not really free for most of its filers. While the ads clearly state the company is offering filers “free” or “simple returns,” the FTC alleges H&R Block made it difficult for consumers to understand if their returns actually qualified as “simple.” In fact, the FTC says the company frequently changed its own definition of “simple” without providing customers with a clear breakdown of the terms. 

Customers were left to navigate the website in search of a clearer understanding and only found fine-print footnotes, which led them to hyperlinks at the very bottom of the page. Clear examples of the confusion and frustration caused by the company’s allegedly deceptive claims can be found on pages 10 to 15. Firing back against the FTC complaint, in an interview, H&R Block claimed they’ve provided their customers with options to understand what they qualify for when filing with the company and are able to work with their customer service agents via phone or chat or on their own through their voice virtual assistant.

Earlier this month, the FTC filed a similar complaint against Intuit, maker of Turbo Tax tax filing software. According to the report, the FTC believes Intuit  has deceived its customers with “bogus advertisements pitching ‘free’ tax filing that millions of consumers could not use.” As of now, no dates have been set for the hearing of the cases against H&R Block and Intuit. However, a FTC spokesman claimed both will take place before an administrative judge.

H&R Block, Inc., or H&R Block, was founded in July 1955 and is an American tax preparation company headquartered in Kansas City, Missouri. The Tax company operates approximately 12,000 retail offices staffed by roughly 3,600 tax professionals worldwide. In 2021, the company was estimated to have brought in a revenue of 3.413 billion USD.

If you have used H&R Block and have felt coerced into purchasing more expensive services or had your tax information deleted after choosing a more affordable option, we may be able to help you. For more information on how a Morgan & Morgan complex litigation class action attorney may be able to help you, contact us today by dialing 855.696.0024 or completing our free, no-obligation case evaluation form.