WASHINGTON, D.C. — The Federal Trade Commission (FTC) is taking action against tax preparation company H&R Block, accusing the firm of unfairly deleting consumers’ tax data and using deceptive marketing techniques. The FTC alleges these practices have caused significant inconvenience to consumers, costing them both time and money.
According to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, “H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products.” He added that the action taken by the FTC demonstrates that companies employing coercive techniques harmful to consumers can expect scrutiny from the agency.
The FTC’s administrative complaint accuses H&R Block of leading consumers into higher-cost products designed for more complicated tax filings, even when many consumers do not need the additional tax forms and schedules offered by these products. The complaint further alleges that H&R Block does not clearly explain which of its products cover what forms, schedules, or tax situations. This lack of clarity often leads consumers to start completing their tax returns in products that are more expensive than necessary.
When consumers realize they do not need or want these more expensive products and attempt to downgrade, H&R Block allegedly presents them with a series of time-consuming challenges. These include requiring consumers to contact customer support via chat or phone and then deleting all the tax data they have entered, forcing them to start their tax return from scratch. This process creates a significant disincentive to downgrading, contrasting starkly with the seamless upgrade process where consumers’ data instantly moves to the more expensive product.
The complaint also alleges that H&R Block has engaged in deceptive advertising for years, marketing its online tax preparation services as “free” when many consumers are not eligible to use the company’s free products.
H&R Block’s advertisements on TV and online often promote the idea that consumers can file for “free” with the company. However, the ads often only state in fine print that the “free” offer applies to “simple returns.” The ads do not define what a “simple return” is, and the complaint notes that H&R Block has changed its definition of a “simple return” multiple times in recent years. The FTC alleges that H&R Block was aware of consumers’ frustration and confusion with these misleading advertisements.
The FTC’s action against H&R Block underscores the agency’s commitment to protecting consumers from deceptive marketing and unfair business practices. It serves as a stark reminder for businesses to maintain transparency in their advertising and product offerings.
The FTC’s decision to issue the administrative complaint was unanimous, with a 3-0 vote. The staff attorneys handling this matter are Claire Wack, Simon Barth, and Christopher E. Brown of the FTC’s Bureau of Consumer Protection. This case is a significant step in holding companies accountable for their business practices and ensuring consumers are treated fairly and transparently.
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