H&R Block to Pay $7 Million in FTC Settlement

H&R Block, the largest tax preparation service in the U.S., has agreed to pay $7 million to the Federal Trade Commission (FTC) to resolve allegations that it misleadingly advertised its free online tax filing services. The settlement, announced today, also addresses claims that H&R Block unnecessarily made it difficult for customers to switch to cheaper products.

The FTC accused H&R Block of deceptive advertising practices, particularly for suggesting that taxpayers could file their taxes online for free. The agency noted that the company’s promotions often included fine print stating that the "free" offer was limited to simple tax returns. Under the agreement, H&R Block must now clearly indicate the percentage of eligible taxpayers for the free products in its advertisements or explicitly state that the majority do not qualify.

Another aspect of the FTC's allegations concerned the company’s handling of product downgrades. Customers wanting to switch to less expensive tax preparation options were reportedly required to contact customer service via phone or chat and then re-enter their tax information for the new products. The FTC highlighted that this process wasted consumers’ time, contrasting with the smooth experience offered to those seeking upgrades.

The $7 million settlement will be distributed to affected customers, but H&R Block neither admitted nor denied the alleged misconduct as part of the agreement. In response to the settlement, H&R Block stated its intention to continue cooperating with the FTC and emphasized that its pricing practices are "fair and transparent."

The resolution of these allegations is part of the FTC's broader efforts to ensure advertising accuracy in consumer services that are critically important, such as tax preparation. The agreement aims to ensure that H&R Block's advertisements accurately reflect the availability of free tax filing options and that all customers receive fair treatment when selecting tax services.