The Federal Trade Commission (FTC) is intensifying its scrutiny of purportedly “free” online tax filing services, such as Intuit’s TurboTax and H&R Block’s Online Filing option, which have long faced criticism for hidden costs and deceptive practices.
Legal Action Against H&R Block
In its latest move, the FTC has filed a lawsuit against H&R Block, alleging deceptive advertising and unfair deletion of users’ tax data. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasized the agency’s commitment to challenging coercive techniques that harm consumers.
Allegations Against H&R Block
The FTC’s complaint against H&R Block centers on the company’s online filing system, which allegedly guides users towards higher-cost services before allowing them to downgrade. Users attempting to switch to a free or lower-cost option encounter obstacles, including the deletion of previously entered data, and are directed to contact customer service, forcing them to restart the process.
Furthermore, H&R Block is accused of misleadingly advertising a “free” service, despite many users not qualifying for it.
H&R Block’s Response
In response to the allegations, H&R Block’s chief legal officer, Dara Redler, defended the company’s practices, citing the provision of value, tax expertise, and transparent pricing. Redler also emphasized H&R Block’s options for users to downgrade to less expensive products.
FTC’s Past Actions and Industry Practices
The FTC’s action against H&R Block mirrors its previous lawsuit against Intuit, the maker of TurboTax, for similar deceptive practices. Intuit has challenged the FTC’s ruling, arguing against accusations of misleading advertising.
An investigation by ProPublica in 2019 uncovered a pattern of complex practices by Intuit and H&R Block, including efforts to obscure free filing options. These practices, reinforced by extensive lobbying efforts, have perpetuated a system favoring paid services and hindering the adoption of free tax filing solutions.
Conclusion
As the FTC continues to target deceptive practices in the tax filing industry, the legal battle underscores broader issues surrounding consumer protection and the accessibility of tax preparation services. With ongoing scrutiny and legal action, the landscape of online tax filing may see significant changes in the coming years.
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