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H&R Block Used Deceptive Marketing, Erased Taxpayer Data, FTC Claims

An H&R Block tax preparation office is seen on Flatbush Avenue in the Prospect Heights neighborhood of Brooklyn, New York on February 6, 2024.

Michael M. Santiago | Getty Images News | Getty Images

After cracking down on the creator of TurboTax IntuitionThe Federal Trade Commission filed an administrative complaint against H&R blockalleging that the company deceptively marketed free filing products and wrongly deleted users’ tax data.

H&R Block marketed free products to many consumers who were not eligible and made it difficult to downgrade, according to the complaint. One of the obstacles to switching was “data wiping” – or removing a user’s current tax filing information – which required them to start from scratch.

“H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, tricking them into overpaying for its products,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said Friday .

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While downgrading requires the filer to contact customer service via chat or phone, product upgrades are done “seamlessly,” the complaint claims.

“We believe we offer our clients great value, unmatched tax expertise, and fair, transparent pricing,” Dara Redler, H&R Block’s chief legal officer, wrote in an emailed statement. “H&R Block allows consumers to upgrade to a less expensive DIY product through multiple mechanisms while ensuring accurate tax return preparation.”

Ed Mierzwinski, a consumer advocate with the U.S. Public Interest Research Group, said PIRG was pleased to see the FTC suing H&R Block and Intuit for their “misleading” or “deceptive” promises of free tax reporting products.

FTC Bans Intuit’s ‘Deceptive Advertising’

This is the FTC’s second action against tax filing software providers in recent history. Last month, the FTC banned misleading advertising from TurboTax maker Intuit after upholding a September ruling that the company violated federal law. The notice states that Intuit marketed free TurboTax software to tax filers who were not eligible and upgraded tax filers to deluxe and premium products.

An Intuit spokesperson said the company has appealed the “deeply flawed decision” and hopes to prevail “when the matter ultimately returns to a neutral body.”

Other free tax filing options

Meanwhile, consumers have several free tax filing options this season, including a Direct File pilot through the IRS, which will offer limited free filing to certain taxpayers in 12 states by mid-March . Last week, an IRS official said the pilot project would soon be available to the public in all 12 states for “short, unannounced periods of time.”

Taxpayers can also use IRS Free File, which offers free guided software for filers with adjusted gross income of $79,000 or less for 2023, among other choices.

2024 Tax Tips: IRA Contributions and Deadline

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