FTC Lawsuit Prompts Major Changes in H&R Block’s Online Tax Filing Practices

Filing tax documentsPhoto by Nataliya Vaitkevich on Pexels.com

WASHINGTON, D.C. — In a significant development for consumers using H&R Block’s online tax filing services, the Federal Trade Commission (FTC) has reached a proposed settlement with the tax-filing giant following allegations of deceptive practices. This settlement is designed to enhance transparency and ease the tax filing process for millions of American taxpayers.

The FTC’s lawsuit, initiated in February 2024, accused H&R Block of misleading advertising, claiming its online tax filing services were “free” when, in reality, many consumers found themselves unable to file at no cost. H&R Block’s practices of obscuring which products suited specific tax situations led users to inadvertently choose more expensive options than necessary. When consumers attempted to switch to more affordable alternatives, they encountered lengthy procedures, including mandatory interactions with customer service and the loss of previously inputted data.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, articulated the commission’s objectives: “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. The FTC’s action today will help lower the stress and expense of tax season for millions of taxpayers.”

Under the proposed settlement, H&R Block must implement changes by the 2025 tax season, ensuring consumers can downgrade their product choices without the need for time-consuming customer service engagements. Furthermore, H&R Block is prohibited from deleting any previously entered data when consumers opt for a less expensive product. By 2026, the company must guarantee that users who downgrade return to the same stage of their tax filing process, preserving their entered data and reducing redundant efforts.

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Additionally, H&R Block is required to pay $7 million to the FTC, which will be used to compensate consumers affected by these practices. The settlement also mandates that H&R Block’s advertising clearly disclose the percentage of taxpayers eligible for “free” services or openly state that the majority do not qualify, ensuring better-informed consumer decisions.

This settlement marks a pivotal step toward improving the consumer experience during tax season, reflecting the FTC’s commitment to fostering fair marketplace practices. As H&R Block prepares to implement these changes, consumers can look forward to a more transparent and efficient tax filing process.

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