Federal Trade Commission Sues H&R Block for Allegedly Making Downgrading to Lower Cost Tax Preparation Packages Difficult
Last week, the Federal Trade Commission (FTC) filed a lawsuit against tax preparation company H&R Block, accusing it of making the process of downgrading to lower cost or free contact filing packages unnecessarily time-consuming and frustrating for consumers. The complaint alleges that H&R Block forces consumers to contact customer service and re-enter all their tax data if they wish to switch to a lower-priced option, while the upgrade process is hassle-free.
FTC: H&R Block Coerces Consumers into Purchasing More Expensive Online Products
According to the FTC complaint, H&R Block has coerced consumers into purchasing more expensive contact tax preparation products than they need or want by making it difficult for them to downgrade to lower-priced options. Consumers who choose to switch must start their tax returns over in a less expensive product and lose previously entered information.
FTC Alleges Deceptive Marketing Practices by H&R Block
The FTC also accuses H&R Block of engaging in deceptive marketing practices when it comes to advertising its free contact filing option. The complaint states that the company does not clearly indicate who actually qualifies for the free filing option beyond indicating that it is available for those with “simple returns,” without defining what H&R Block considers a simple return to be.
H&R Block Responds to FTC’s Allegations
In response to the FTC’s allegations, H&R Block told CNN that consumers can downgrade to lower-priced DIY products via multiple mechanisms and that customers can work with a customer service agent or use the company’s voice virtual assistant. However, H&R Block did not dispute the fact that previously entered data is cleared when a person downgrades to a lower-priced product.
FTC: H&R Block Engages in Deceptive Marketing for Online Free Filing
The FTC alleges that H&R Block deceives consumers by representing to them that they can file for free using the company, when in fact, many consumers have tax situations that are not covered by H&R Block’s contact product. The complaint states that H&R Block does provide a list of federal tax Website contact forms that may be filed using the free file option on its Website, but it is less clear regarding the state tax Website contact forms that qualify.
Eligibility for H&R Block’s Free Filing Option
It is not clear from the filing-product comparison page on H&R Block’s Website what income thresholds apply to be eligible for free file. H&R Block told CNN that there is no threshold and that anyone who only has a W-2 or other Website contact forms supported by the company’s free offering will not be charged for tax preparation.
FTC Takes Similar Action Against Intuit
It is worth noting that earlier this month, the FTC took similar action against Intuit, maker of TurboTax tax filing software, for deceiving consumers with bogus advertisements pitching ‘free’ tax filing that millions of consumers could not use.
Conclusion
The FTC’s lawsuit against H&R Block comes as the IRS is set to launch its free tax filing pilot program. The case will be heard before an administrative judge and no date has been set for the hearing yet.
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IRS set to launch its free tax filing pilot program. Here’s how it will work
