FTC goes after second tax prep firm, H&R BLOCK joins INTUIT TURBOTAX for deceptive claims of “Free tax prep”

This year the IRS announced its roll-out of a pilot program for free government filing of taxes in a dozen states, but the big tax prep companies continue to claim that their products are free for everyone, when they are not always free. As US. PIRG’s Ed Mierzwinski explained to Kate Dore of CNBC  today:

“PIRG is pleased to see the FTC pursuing H&R Block and Intuit (Turbotax) for “misleading” or “deceptive” promises of free tax filing products.”

As CNBC went on to explain:

“After cracking down on TurboTax maker Intuit, the Federal Trade Commission has filed an administrative complaint against H&R Block, alleging the company deceptively marketed free filing products and wrongfully deleted users’ tax data.”

The FTC’s Sam Levine said in a news release:

 “H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products.”

The FTC explained it’s harder to downgrade, requiring a call to customer service, but it’s easy to upgrade!

Similarly, the complaint alleges that while consumers can upgrade without contacting H&R Block customer service, the opposite is true for the downgrade process. Since at least 2014, consumers attempting to downgrade have had to reach out to the company to request a downgrade – a process that has often been frustrating and time-consuming. In addition to the company’s unfair practices regarding downgrades, the complaint also alleges 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.

As I explained in January, we don’t expect the tax prep companies to give up without a fight:

“For many years, the tax prep industry locked in its monopoly — for years the companies even got free space on the IRS website — by providing a so-called “Free File” program ONLY to lower income Americans– but there was a catch. The firms charge fees for add-on services.

And as you saw in the latest FTC complaint, it requires extra work to cancel or downgrade, but the firms make it easy to upgrade! No telephone call to customer service required. As the FTC says: ZILCH!

IRS Direct File –it’s really free –is coming to everyone soon, but the tax prep firms aren’t happy.  Taxpayers should be!