FTC files complaint against H&R Block for deceptive marketing, deleting tax data for downgrading

The Federal Trade Commission (FTC) has filed a complaint against tax company H&R Block for allegedly deceptively marketing products as “free” when they’re not, and for deleting customers’ tax data when they try to downgrade to more affordable online services.

“H&R Block designed its online products to present an obstacle course of tedious challengers to consumers, pressuring them into overpaying for its products,” Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, said in a statement. “Today’s action demonstrates that companies using coercive techniques that harm consumers can expect to hear from the FTC.”

The FTC filed an administrative complaint that alleges H&R Block’s online tax filing products have led consumers to higher-priced items for more complex tax filing, even when most people do not need it.

The company fails to clearly explain which of its products” cover certain forms, schedules or tax situations, which leads customers to begin completing their taxes in more expensive and unnecessary ways.

When consumers realize they don’t need the more expensive products, the company makes them go through a “series of time-consuming challenges” in order to downgrade to a less expensive option, the complaint said.

Consumers also have to contact the company customer support via an online chat or phone in order to downgrade, which many users complained as a “frustrating and time-consuming” process. Then the system deletes all of the tax data that the user had entered.

“This stands in contrast to the upgrade process, where consumers’ data seamlessly moves to the move expensive product instantly,” the FTC’s filing said.

The FTC also alleges that the company has engaged in deceptive marketing “for years,” when it has said that its tax services are free, even though many consumers are not eligible to use the no-cost products.

The commission noted that it files administrative complaints when it has “’reason to believe’” that a law has been or is being violated and is of public interest.

The compliant is similar to a lawsuit, but will be tried in a formal heading before the FTC’s administration law judge.

The commission is currently made up of Democrats and voted 3-0 to issue the complaint against the company, The Verge reported.

H&R Block Chief Legal Officer Dara Redler said in a statement that the company provides its clients “with a great deal of value, unmatched tax expertise, and fair and transparent pricing.”

Redler said thy have provided clients with a “free DIY filing option for more than 20 years” and their available resources “demonstrates our commitment to making filing your taxes more accessible and more transparent for all.”

She added that H&R Block allows customers to downgrade through “multiple mechanisms while ensuring the preparation of accurate tax returns.” Her statement did not mention the FTC complaint.

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