The Federal Trade Commission (FTC) has finalized a settlement with H&R Block requiring the tax preparation company to implement significant changes ahead of the 2025 tax filing season, alongside additional reforms by 2026. The agreement also includes a $7 million payment to compensate consumers affected by the company’s unlawful practices.
The settlement follows a February 2024 FTC complaint alleging that H&R Block engaged in unfair and deceptive practices. These included requiring customers to contact customer service to downgrade to a less expensive product, deleting previously entered data when consumers downgraded, and misleading claims about “free” tax filing services.
Changes for the 2025 Tax Season
H&R Block must streamline its downgrade process by February 15, 2025. The settlement mandates the implementation of automated tools, such as chatbots, to allow consumers to downgrade products without needing to speak with customer service representatives. This change aims to eliminate barriers for customers seeking more affordable options.
Additionally, the company is prohibited from deleting consumers’ previously entered data upon downgrading. By the 2026 tax season, H&R Block must ensure that customers who revert to a downgraded product can resume their tax preparation from where they left off, minimizing wasted time and effort.
Transparency in Advertising
To address concerns over deceptive “free” filing claims, the settlement requires H&R Block to clarify eligibility for free tax filing services in its advertisements. This includes disclosing either the percentage of taxpayers eligible for free filing or stating that the majority of taxpayers do not qualify.
Financial Compensation for Consumers
The $7 million payment included in the settlement will be used to compensate customers harmed by the company’s practices. Details on how consumers will receive compensation were not included in the FTC’s announcement.
FTC Approval and Commentary
The Commission approved the final order in a unanimous 5-0 vote after considering three public comments on the proposed settlement. Commissioners Andrew Ferguson and Melissa Holyoak issued a joint concurring statement.
This settlement underscores the FTC’s commitment to holding companies accountable for practices that harm consumers and ensuring greater transparency in the marketplace. Consumers filing their taxes with H&R Block in 2025 and beyond can expect an improved and more user-friendly experience as a result of these changes.