H&R Block, a leading tax-preparation software giant, is facing allegations from the Federal Trade Commission (FTC) for deceptive practices in its marketing and data handling. The FTC has accused the company of pressuring customers into paying for pricier services by deleting their tax data when they attempt to downgrade from more expensive products.
The FTC’s administrative complaint against H&R Block highlights the company’s online tax-filing products, which allegedly lead users to costlier options designed for more complex tax filings, regardless of their actual needs. If customers realize they don’t require the more expensive option, they are reportedly subjected to a series of time-consuming hurdles to downgrade, including contacting customer support via chat or phone. Upon initiating the downgrade process, H&R Block’s system allegedly deletes all the tax data entered by the consumers, compelling them to restart their tax return from scratch.
According to the FTC, this practice creates a significant disincentive for customers to opt for a less expensive option, while data seamlessly moves to more expensive products instantly. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, condemned H&R Block’s tactics, stating that the company has designed its online products to pressure consumers into overpaying for its services through a series of tedious challenges.
Aside from the allegations related to downgrades, the FTC’s complaint also accuses H&R Block of engaging in deceptive advertising for its online tax preparation services, which have been marketed as free despite not being so for many customers. The complaint marks the beginning of an administrative process against the company for its unfair practices and deceptive marketing.
In response to the allegations, Dara Redler, H&R Block’s chief legal officer, stated that the company provides its clients with fair and transparent pricing and allows consumers to downgrade to a less-expensive DIY Product via multiple mechanisms while ensuring the prepar
