FTC Says H&R Block Pressures People Into Overpaying for Tax Prep

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People hate filing taxes, but they love getting something for free. So, when H&R Block advertises that people can use its online tax product for free, people listen. The problem, according to the FTC? It often isn’t free.

H&R Block’s online tax product is free only if you meet H&R Block’s definition of a “simple return,” a tax situation that the FTC says many people think they have, but don’t. It’s also a tax situation that isn’t defined — H&R Block can (and does) change what tax situations qualify for free at any time.

Once you’re alerted that you don’t qualify for the free version — after you’ve taken the time to enter in all your information — you’re prompted to choose one of H&R Block’s paid tax filing products. But what if you choose the wrong version and want to switch? You’ll face major hurdles.

The FTC says that H&R Block makes it easy to upgrade to a more expensive version but adds barriers that make it difficult and burdensome to downgrade to cheaper products. Moving to a more expensive product? The information you already entered online is seamlessly transferred to the new product. But if you later realize you could get by with a cheaper version and ask to switch, H&R Block will wipe out all the information you had (painstakingly) put in. But that’s not all. To downgrade, you’ll also have to contact customer service (if you can even get through to an agent).

The result? The FTC says a lot of people are stuck paying for the more expensive product — that they didn’t want or need — so they wouldn’t have to reenter their tax info. Others abandoned their returns, having wasted hours of their time.

Does that policy sound like a trick? The FTC thinks so. If you see a company doing something like that, it might be illegal. Tell the FTC at ReportFraud.ftc.gov.

If you’re looking for free options for your taxes, check if you qualify for the IRS’s Free File program.