The Federal Trade Commission (FTC) has reached a proposed settlement with H&R Block regarding allegations of deceptive practices in the company’s online tax filing services. The settlement requires H&R Block to address practices that misled consumers by advertising “free” tax filing options that were inaccessible to most users and creating barriers for customers seeking to downgrade to less expensive products. These barriers included requiring customers to contact customer service and deleting previously entered tax data upon downgrading. Additionally, H&R Block failed to clarify the coverage of its various tax products, causing many users to opt for unnecessarily expensive options. As part of the settlement, the company will pay $7 million to the FTC for consumer redress and implement significant changes by the 2025 and 2026 tax seasons.
The agreement mandates that H&R Block facilitate easier downgrades, preserve user-entered tax data, and clearly disclose eligibility for its “free” products. The FTC emphasized that such measures aim to alleviate the stress and expense of tax season for millions of taxpayers. The settlement is currently open for public comment before final approval. Each future violation of the consent order, once finalized, could result in a civil penalty of up to $51,744, underscoring the order’s legal enforceability.
