FTC Targets H&R Block For Deleting Customer Tax Prep Data

In their latest move against tax preparation companies, federal regulators charged H&R Block (HRB) of deliberately deleting customer data and disseminating misleading advertisements for free tax filing services.

He Federal Trade Commission (FTC) filed a complaint against the company on Friday, saying the company made it difficult to file returns for customers who began completing their tax returns with a more expensive service than they needed and then tried to switch to a cheaper option. The company required taxpayers to contact customer service to make the change and then deleted all the information they had entered, forcing them to start over.

"H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them to overpay for its products," said Samuel Levine, director of the FTC's Bureau of Consumer Protection, in a Press release. "Today's action demonstrates that companies that use coercive techniques that harm consumers can expect to hear from the FTC."

The FTC, a government consumer watchdog agency, also accused the company of advertising "free" tax preparation services without making clear that most taxpayers do not qualify for the company's free services and would have to pay. The allegations are similar to those the FTC and state attorneys general have made against Intuit (INTU) TurboTax, which resulted in Intuit pay a $141 million settlement to the states. Intuit is contesting the FTC complaint.

H&R Block denied that its prices and services were unfair to customers.

“We believe we offer our clients great value, unmatched tax experience, and fair and transparent pricing,” H&R Block Chief Legal Officer Dara Redler said in a statement. "H&R Block allows consumers to switch to a less expensive DIY product through multiple mechanisms, while ensuring accurate tax return preparation."

The FTC's action is the latest in a series of government actions against the tax preparation industry. In addition to the FTC's regulatory actions, the IRS is launching a pilot website that allows taxpayers to file their federal returns online directly to the tax agency this tax season, bypassing the need for third-party tax preparation software. third parties.

Consumer advocates and some politicians have long argued that taxpayers should be able to file their taxes online for free. without a tax preparation service acting as an intermediary, similar to how filing works in many other countries. Previous government efforts, such as the little-known and rarely used “Free File” Programworked with private industry to offer free filing services to people with annual incomes of $79,000 or less.

He Inflation Reduction Lawsigned by President Joe Biden in 2022, changed that approach and provided funding to the IRS to establish an online tax filing service for the first time in its history.