The Federal Trade Commission (FTC) has recently filed a complaint against H&R Block (HRB), alleging that the tax preparation company engaged in misleading advertising practices and obstructed customers from accessing more affordable tax filing options. According to the FTC, H&R Block made it challenging for customers to switch from a higher-priced service to a cheaper one. When customers attempted to change their service, they reportedly had to start over because the company deleted their previously entered data.
Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection, criticized H&R Block’s online products, stating they create “an obstacle course of tedious challenges” that pressure consumers into paying more than necessary. The FTC’s allegations against H&R Block mirror similar complaints levied against Intuit’s TurboTax, which led to Intuit agreeing to a $141 million settlement with various states. However, Intuit is currently contesting the FTC’s complaint.
In response to these allegations, H&R Block’s Chief Legal Officer, Dara Redler, defended the company’s practices. Redler asserted that H&R Block provides significant value, expert tax assistance, and transparent pricing. She also mentioned that the company allows consumers to downgrade to a less expensive product through multiple channels while ensuring accurate tax return preparation.
This FTC action is part of broader regulatory efforts targeting the tax preparation industry. In addition to these measures, the IRS has introduced a pilot online tax filing service, enabling taxpayers to file federal returns directly, thereby eliminating the need for third-party software. This initiative aligns with the views of consumer advocates and some politicians who believe that Americans should have the option to file taxes online for free, without third-party intervention.
These developments follow the Inflation Reduction Act signed by President Joe Biden in 2022, which provided the IRS with the necessary funding to establish its own online tax filing service. This move marks a significant shift from previous government efforts that collaborated with private companies to offer free filing services to individuals with annual incomes below $79,000, a program known as “Free File.”
In light of these evolving circumstances in the tax preparation sector, H&R Block, alongside other companies, faces increasing scrutiny and regulatory action. As the landscape of tax filing services continues to change, the demand for transparent, accessible, and affordable tax preparation options remains a prominent focus for regulators and consumers alike.
