The Federal Trade Commission (FTC) has finalized an order that requires H&R Block, a tax preparation company, to implement several changes for the 2025 tax filing season. The settlement also mandates that the company pay $7 million to compensate consumers affected by its unlawful practices.
In February 2024, the FTC filed a complaint against H&R Block, accusing the company of unfairly requiring consumers to contact customer service to downgrade to cheaper products, deleting users' previously entered data, and making deceptive claims about "free" tax filing.
Under the terms of the settlement, H&R Block must facilitate easier downgrades for consumers by eliminating the practice of completely deleting previously entered data upon downgrade. By February 15, 2025, customers should be able to downgrade products using a chatbot or other automated means instead of having to call customer service or chat with a live agent.
Additionally, by the 2026 tax filing season, H&R Block is required to stop deleting consumers' information entirely. When a consumer downgrades back to their original product choice, they must return to the same point in their filing process as when they upgraded. This change aims to save consumers significant time and effort. The company must also provide an easily noticeable option for downgrading without needing live customer service interaction.
The settlement further obligates H&R Block to disclose in its "free" advertising either the percentage of taxpayers eligible for any "free" products or state that most taxpayers do not qualify.
After reviewing three comments on this matter, the Commission voted unanimously (5-0) to approve the final order and responded accordingly. Commissioner Andrew Ferguson issued a concurring statement joined by Commissioner Melissa Holyoak.
The FTC's mission is to promote competition and protect and educate consumers. They emphasize that they will never demand money or make threats and encourage learning more about consumer topics at consumer.ftc.gov or reporting fraud at ReportFraud.ftc.gov.
