H&R Block settles US FTC charges over ‘free’ filing claims, customer downgrades

By Jonathan Stempel

(Reuters) – H&R Block (NYSE:) agreed to pay $7 million to settle multiple U.S. Federal Trade Commission charges, including that it deceived many taxpayers into believing they could file their taxes online for free.

Tuesday’s settlement requires the largest U.S. tax preparation service to disclose in advertising either the percentage of taxpayers eligible for free products, or that a majority does not qualify.

According to the FTC, H&R Block’s ads sometimes buried in fine print that its “free” offer applied only to simple returns.

The settlement also resolved charges that the Kansas City, Missouri-based company wasted time of customers who wanted to downgrade to cheaper products by insisting they speak with customer service by phone or chat rather than do it themselves, and then reenter their tax information for the downgraded products.

Customers who sought upgrades encountered no such obstacles the FTC said.

The $7 million will be paid to customers. H&R Block did not admit or deny wrongdoing in agreeing to settle.

In a statement, the company said it will continue to work with the FTC, and that its pricing is “fair and transparent.”