Business Blog
H&R Block wiped out the tax data of consumers trying to choose a more affordable option, FTC alleges
Ever spend hours (and hours) inputting complicated financial information online only have it deleted? It’s frustrating enough when it’s due to a technical glitch, but according to an FTC complaint against tax preparer H&R Block, wiping out consumers’ already keyed-in tax data was an intentional sales tactic the company used to pressure people to pay for pricier products. Read on to learn more about H&R Block’s conduct that the FTC alleges is, well, taxing – and deceptive and unfair – to consumers.
According to an administrative complaint that will be available soon on the FTC website, H&R Block has used an extensive TV and online campaign to deceptively market its services as “free” – as in “nada. . . zip. . . zilch” – when the services weren’t free for most filers. While ads said the “free” offer applied to “simple returns,” the FTC alleges H&R Block made it difficult for consumers to figure out whether their returns qualified as “simple.” What’s more, the FTC says the company frequently changed its own definition of “simple.” The complaint cites examples of the confusion and frustration caused by the company’s allegedly deceptive claims.
But it’s how H&R Block allegedly coerced people to pay for services they didn’t need that merits particular attention. According to the complaint, throughout the online filing process, the company upsold pricier services without a clear breakdown of what they would cost. But when consumers decided to downgrade to a more affordable H&R Block product, the FTC says the company had some aggravating – and unfair – surprises for them. First, they couldn’t downgrade without communicating directly with H&R Block’s customer service department. Second, after people had spent substantial time inputting their tax information and then decided to downgrade to a less expensive H&R Block filing product, the FTC says the company presented them with an unfair choice: pay for a more expensive product they didn’t want or need or H&R Block would wipe out nearly all of their already typed-in tax information and make them start from scratch.
And let’s be clear. The FTC alleges this wasn’t a system glitch. It was an intentional sales tactic to create a disincentive for consumers who wanted a more affordable option. The complaint charges that H&R Block retained the data for consumers who upgraded, but deleted the data for those who downgraded, forcing many consumers to choose between overpaying or losing all the information they had already entered.
Count I of the complaint challenges H&R Block’s policy of making consumers who want to downgrade communicate with its customer service department – an often time-consuming hoop the company didn’t require upgrading customers to jump through. Count II alleges that H&R Block’s tactic of requiring consumers either to pay for more expensive products they didn’t need or to have their data wiped out after hours of effort was an unfair practice, in violation of the FTC Act. Count III alleges that the company’s “free” filing claims are deceptive.
Even at this early stage, this is an important case for advertisers to follow.
It is your choice whether to submit a comment. If you do, you must create a user name, or we will not post your comment. The Federal Trade Commission Act authorizes this information collection for purposes of managing online comments. Comments and user names are part of the Federal Trade Commission’s (FTC) public records system, and user names also are part of the FTC’s computer user records system. We may routinely use these records as described in the FTC’s Privacy Act system notices. For more information on how the FTC handles information that we collect, please read our privacy policy.
The purpose of this blog and its comments section is to inform readers about Federal Trade Commission activity, and share information to help them avoid, report, and recover from fraud, scams, and bad business practices. Your thoughts, ideas, and concerns are welcome, and we encourage comments. But keep in mind, this is a moderated blog. We review all comments before they are posted, and we won’t post comments that don’t comply with our commenting policy. We expect commenters to treat each other and the blog writers with respect.
We don't edit comments to remove objectionable content, so please ensure that your comment contains none of the above. The comments posted on this blog become part of the public domain. To protect your privacy and the privacy of other people, please do not include personal information. Opinions in comments that appear in this blog belong to the individuals who expressed them. They do not belong to or represent views of the Federal Trade Commission.
My taxes were fairly simple and i was charged all of my state return for the fee of doing my taxes e file through hr block. Thats almost 300. Dollars and my taxew were simple i felt.
Not only did they do this, they also said audit defense free and don't come to your help or defense when waiting 3 years for a refund spending countless hours on the phone with the irs and then having the irs claim your 1040x was never received and garnishing your refunds for the next 4 years and losing the paperwork conveniently. They also don't keep your records available to you online if you don't use them the next time though they say they will. To many lies for greed.
I use H&R Block physical software because my returns are too complicated to qualify for free or online filing. They seem typical in their promotion of other services or upgrades, and they at least don't require any personal ID to register and use their software. I expect there's opportunity to collect personal data when they offer promotions like Amazon gift cards as the refund method in exchange for a small bonus incentive.
My comment here is only that I would doubt "hours" of data entry time for online returns really happens, given the limited capacity to process returns that require much more than a W-2 or 1099s. Carryover data wouldn't include any more than name, address, SS, previous year's AGI, filing status. No big deal to reenter that.
But their strategy was duplicitous and I'm glad that the FTC called them out. Ditto for Intuit TurboTax and their similar ruse.
Thanks for the information. That is a shame for a reputable company like H&R Block to use this kind of tactics on customers.
In reply to Thanks for the information… by Sharp Pen
Who said H & R Block was a reputable company?
I just went with another provider. Alot of the tax providers did the same thing this year after advertising free this year. I filed with TurboTax for 5 years and my return this year some how wasn't a simple return anymore and wasn't free.
Thanks for the post
Thanks for the article! Will check out these options in details later.
H&R BLOCK Has used my IDENTITY AND PERSONAL INFORMATION for their access in 2021-1099g my account isn't found
And also TurboTax, Intuit, have deceptively fraud acts as well
My taxes were pretty simple too, I suspect. I had 2 1099s and no write offs of any sort. Simple entering numbers and my daughter's info for a dependent. I haven't had to file for 6 yrs but always went to them previously for my taxes. They charged me $415! (mind you only federal bc I didn't have to file state) The last gave me a $25 coupon so I ended up paying about $390 to have mine filed with them. I found out that number at the very end. I will NEVER use H&R Block again. Unbelievable.
"I spent 8 hours in two appointments to get some work done, but my information was deleted for unknown reasons. When I asked the person helping me to retrieve the work we did together, she told me that it was all deleted and that I would need to start over with someone else. Moreover, she blocked my emails. I have a deadline of March 18th, and I won't have enough time between my work schedule to redo all the work again."
I just had a similar problem with HR Block's software. Using the free software, the only income asked for was Wages, Tips etc. My income is from 1099-R. Got through the rest of the questionnaire to find a pop-up suggesting the paid version.
I had soo many issues with en this year to the point of having to redo my taxes manually and manually reentered some forms. They did not even import some of my previous data like carry over capital losses. One form had import errors and the form literally only had 2 boxes of numbers to import but because there were no visual issues it wasn't until I deleted the form and manually input it that I find the error. They also made me pay more for another tier for importing my stock records but they screwed that up too so why did I pay for that?
They are scammer and BEEN GETTING AWAY THEY STOLE MY MONEY EVERYONE NEEDS TO GET TOGETHER NOT SAY OH WELL
I will continue to contact every news station state's attorney general they not only took $400 for filing fees was quoted not even close to that at 7:00 p.m. on March 1st my state taxes hit on my emerald card at 701 my money disappeared they did a 6-day investigation and they said it was denied because of my location whatever that means I called three times my pin wouldn't work I got five debit cards mailed to me all the same number but different the three digits on the back different 6 days and denied because the location this is absolutely a nightmare and crazy and I believe they're all behind it and they get people who really really depend on that tax money and they've been getting away with it as soon as I said I think it was somebody on the inside who did that they knew my taxes were coming and it's in a town I don't even drive through don't even know but yeah location got denied fraud somebody stole almost $1,000 but I'm not giving up