WASHINGTON, D.C. — The Federal Trade Commission (FTC) has finalized a settlement with H&R Block, requiring the tax preparation company to implement significant changes to its business practices while providing $7 million in compensation to consumers harmed by its unlawful conduct. The agreement also mandates increased transparency in the company’s advertising for “free” tax services and improvements to its product downgrade options.
The FTC’s February 2024 complaint detailed several allegations against H&R Block, including that it unfairly forced consumers to contact customer service to downgrade to a lower-cost product, deleted previously entered tax information after downgrades, and made deceptive claims about “free” tax filing options. These practices, according to the FTC, caused financial and procedural hardship for many consumers.
Under the finalized settlement, H&R Block is required to make immediate adjustments to its procedures for the upcoming tax filing season. By February 15, 2025, consumers will be able to downgrade products through an automated system, such as a chatbot, rather than having to call or interact with live agents. The company will also stop its practice of deleting customers’ previously entered information by the 2026 tax filing season. Instead, consumers who downgrade to earlier versions of a product will resume filing at the same point they had left off, saving both time and effort.
Another critical aspect of the settlement is the mandate for greater transparency in H&R Block’s advertising. The company must clearly disclose whether only a small portion of taxpayers qualify for its “free” tax filing products or acknowledge that most taxpayers will not be eligible.
The $7 million payment agreed to in the settlement will be distributed to compensate consumers affected by the company’s past practices. This financial remedy underscores the FTC’s focus on ensuring accountability and fairness in industries that serve millions of Americans, particularly during tax season.
This enforcement action aims to protect consumers from deceptive and misleading advertising tactics, which can lead to financial harm and frustration. By holding H&R Block accountable for its actions and promoting greater transparency in its marketing, the settlement sets a precedent for other tax preparation companies to follow suit.
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