The Federal Trade Commission (FTC) has finalized a $7 million settlement with H&R Block, emphasizing the need for significant modifications to its operational and advertising practices leading up to the 2025 tax filing season. This settlement stems from accusations that H&R Block engaged in practices that limited consumer choice, such as requiring customers to contact customer service to downgrade to less expensive services and deleting prior user data during such downgrades. This agreement reflects the FTC’s broader mission to ensure transparency and fairness in business practices.
Why did the FTC intervene?
The FTC alleged that H&R Block misled consumers by advertising “free” tax-filing services while failing to disclose that most taxpayers did not qualify for them. Additionally, the company faced criticism for forcing users wishing to switch to a cheaper product to navigate complex customer service processes. The deletion of previously entered tax data was another contested point, as the regulator deemed this tactic as a deterrent to downgrading services. The settlement outlines measures to rectify these issues and simplify the customer experience.
What changes will H&R Block implement?
Under the terms of the settlement, H&R Block must allow customers to downgrade their products through automated options, such as chatbots, by February 2025. The company is also required to stop deleting user data during such downgrades by the 2026 tax season. Furthermore, H&R Block must disclose the percentage of taxpayers eligible for its “free” services in advertising or clarify that most individuals do not qualify. These measures aim to address consumer grievances and increase transparency in its offerings.
Looking back, this settlement is not the first instance of H&R Block being scrutinized by regulators. In prior years, the company faced legal challenges for similar advertising practices. However, this settlement marks one of the most comprehensive overhauls of its operations. Industry observers suggest that stricter regulatory policies signal a growing demand for accountability from financial service providers.
H&R Block responded by highlighting its long-standing commitment to providing quality tax preparation services.
“We are proud of the value, unmatched tax expertise, and fair and transparent pricing we provide to our clients, who have trusted H&R Block for nearly 70 years,” the company stated.
The company also expressed its willingness to work with the FTC to comply with the terms of the settlement.
Separately, the FTC also reached a settlement with Angi Services, ordering the gig economy platform to pay $2.95 million over allegations of deceptive earnings claims made by its subsidiary, Handy Technologies. The FTC accused the platform of exaggerating worker earnings and imposing hidden fines and fees, practices the company disputed but chose to settle for expediency.
“Though we were prepared to litigate, we chose to enter into an agreement to put this matter to rest,” a Handy spokesperson remarked.
This case illustrates the FTC’s active stance in addressing deceptive practices across industries. H&R Block’s settlement underscores the regulator’s focus on consumer protection within the tax preparation market, emphasizing the importance of transparency and accessibility in business operations. As the tax season approaches, taxpayers should remain aware of the eligibility criteria for free services and inquire about alternative filing platforms to make informed decisions. Meanwhile, companies must continuously evaluate their advertising and service delivery methods to avoid regulatory scrutiny and ensure customer satisfaction.
