The Federal Trade Commission (FTC) has filed a complaint against tax preparation company H&R Block for deceptive practices that the agency claims “cost consumers time and money.”

The administrative complaint alleges that H&R Block pressures consumers into using higher-cost products made for more complicated tax filings, despite their not needing them. It also alleges that when customers try to downgrade to more affordable options, the company requires them to contact customer service. Then, H&R Block deletes their tax information, so that they have to enter it anew. The complaint states, "This data-wiping practice results in consumers needing to restart their returns from the beginning, including re-entering income information such as W-2 information."

H&R Block's downgrade policy contrasts with the company’s upgrade process, in which customers can have their data move to the more expensive product instantly, and without contacting customer service.

“H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in the FTC's announcement. “Today’s action demonstrates that companies using coercive techniques that harm consumers can expect to hear from the FTC.”   

The complaint also alleges that the company has engaged in deceptive advertising for years, marketing its online tax preparation services as “free” when many consumers are not eligible to use the company’s free products. 

Specifically, according to the FTC's announcement, "The complaint outlines a number of advertisements by H&R Block on TV and online promoting that consumers can file for 'free' with the company. The ads contain language saying—sometimes only in fine print—the 'free' offer applies only to 'simple returns' The ads, however, do not explain what a 'simple return' is, and the complaint notes that H&R Block has changed its definition of a 'simple return multiple times in recent years. According to the complaint, the company was aware of consumers’ frustration and confusion with these misleading advertisements."

H&R Block is not the first tax preparation company to have attracted the scrutiny of regulators or law enforcement in recent years.

In May 2021, Intuit’s TurboTax agreed to a $141 million settlement for deceiving taxpayers eligible to use the company’s IRS free file program in 2016, 2017 and 2018 by steering them to a TurboTax paid program. Turbo Tax began the payout in May 2023.