The FTC is fighting free tax services.

H&R Block was sued by the FTC for fraudulent advertising. It claims H&R Block mislead consumers into starting with a more expensive plan, making downgrading harder. Intuit was previously sued by the FTC for misrepresenting TurboTax practices.

For years, many Americans have paid for "free" online tax filing programs like TurboTax and H&R Block's Online Filing. However, the FTC has pledged to sue them one by one, starting with H&R Block. Last Monday, the consumer protection agency sued H&R Block for deceptive advertising and unfair tax data deletion.

H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products," FTC Bureau of Consumer Protection Director Samuel Levine stated in a news statement.

Today's action demonstrates that companies using coercive techniques that harm consumers can expect to hear from the FTC," Levine said. The FTC claims that H&R Block's online filing system forces consumers to submit all their tax information before realizing they can downgrade to a free or lower-cost alternative.

According to the FTC, downgrading is difficult and time-consuming. The system deletes all the data the user had meticulously typed and tells them to contact customer support to access the downgraded option, forcing them to start over. The FTC said that upgrading a user's service is fast and seamless. H&R Block was also charged by the FTC of falsely advertising a "free" service that many consumers do not qualify for.

H&R Block's chief legal officer Dara Redler told Business Insider the firm offers "a great deal of value, unmatched tax expertise, and fair and transparent pricing." "Further, H&R Block allows consumers to downgrade to a less-expensive DIY Product via multiple mechanisms while preparing accurate tax returns," Redler told Business Insider.

Yes, this is familiar. The FTC has accused TurboTax producer Intuit of deceptive conduct. After suing Intuit in 2022, the consumer commission ruled in January that the business cannot market its services as "free" unless all clients qualify or the advertising explicitly state who does.

Intuit is contesting the FTC's finding, which company spokesperson Derrick L. Plummer called "deeply flawed." "This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case," Plummer said in a statement.

A 2019 ProPublica investigation discovered that Intuit and H&R Block had lobbied for decades to keep tax filing services complex, including blocking their free filing choices from Google search. According to Business Insider, both firms spend millions every year persuading politicians to keep the present arrangement, which leads to customers buying their products. Due to lobbying, the IRS did not launch its online free tax filing pilot until last year.

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