FTC Alleges H&R Block’s Deletion of Tax Data to Deter Downgrading, Claims Filed
H&R Block, one of the leading tax preparation companies in the United States, is facing allegations from the U.S. Federal Trade Commission (FTC) for deleting customers’ tax data when they wanted to downgrade their plan. The FTC claims that this action was deceptive and created a significant disincentive for customers to downgrade.
The complaint filed by the FTC highlights how H&R Block marketed one of its plans as “free” when it was not truly free for many customers. This misleading marketing tactic cost consumers both time and money. Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, stated that H&R Block designed its online products to pressure consumers into overpaying for their services.
One of the major issues identified in the complaint is the difficulty customers face when trying to downgrade their plans. H&R Block has intentionally made this process tedious and time-consuming, forcing customers to spend significant effort attempting to contact their customer service department. To request a downgrade, customers must speak to a live customer service agent or use the product’s online chat service option. Only after the company authenticates the customer’s account can they request a downgrade through an Interactive Voice Response (IVR) system on the phone.
An investigation conducted by an FTC investigator revealed the extent of the obstacles customers face when trying to downgrade. The investigator made multiple attempts to contact H&R Block’s customer service through chat and phone calls but faced difficulty in reaching them. The chat contacts took 20 minutes to finish, primarily due to waiting for a live customer service agent. On the other hand, the phone contact attempts were unsuccessful, with calls abruptly ending after waiting for 10 to 15 minutes.
In another instance, when the investigator contacted H&R Block to request a downgrade using IVR, the company downgraded the account. However, upon logging out and logging back in, all the tax information entered earlier for filing returns was deleted. The FTC noted that this practice has been ongoing since at least the 2014 tax season, and H&R Block has received several complaints about it.
In addition to the deletion of tax data, the FTC also accused H&R Block of deceptive marketing. The company promoted its free plan as being “free with no limitations, disclosures, or disclaimers.” However, certain ads used vague statements that made it difficult for consumers to determine if the product was truly free for them. Customers often started filing their returns under the free plan without being provided with key information about the tax forms and schedules covered. Only after customers had invested significant time and energy into preparing their returns did H&R Block disclose that they did not qualify for the free plan and must upgrade to a paid one.
H&R Block’s Chief Legal Officer, Dara Redler, defended the company, stating that they provide clients with value, unmatched tax expertise, and fair and transparent pricing. Redler emphasized that H&R Block has offered a free DIY filing option for over 20 years and is committed to making filing taxes more accessible and transparent for all.
This is not the first time H&R Block has faced allegations of acting against the interest of customers. In 2022, the company was accused of violating the financial privacy of its customers by sending sensitive personal information to Facebook. Additionally, a report by Democrats in Congress last year accused H&R Block and other tax preparation companies of sharing millions of taxpayers’ data with Meta, Google, and other Big Tech firms.
The allegations against H&R Block highlight the importance of transparency and fair practices in the tax preparation industry. Customers should be able to trust that their data will be handled securely and that they will receive accurate information about the services they are purchasing. The FTC’s complaint serves as a reminder to companies that using coercive techniques and deceptive marketing tactics can have serious consequences.
