H&R Block Agrees to $7 Million FTC Settlement Will Make Lowering Tax Levels Easier
H&R Block has agreed to a Proposed settlement of $7 million by the Federal Trade Commission, following a lawsuit filed by the Internal Revenue Service against the tax preparation service in February.
The The FTC accused H&R Block of deceptively marketing its do-it-yourself tax preparation services as free to ineligible customers Free online low. And even if they did qualify, H&R Block encouraged users to upgrade to paid tax preparation products they didn’t need.
“American taxpayers seeking tax preparation help should be able to choose the services they need – and know the truth about how much they will pay,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.
The $7 million payment will be used to pay customers affected by H&R Block’s business practices, according to the FTC.
Similar to the FTC’s legal battle with TurboTax, H&R Block will have to disclose in its free ads the “percentage of taxpayers eligible” for this tier, or whether the “majority of taxpayers are not eligible.”
“H&R Block prides itself on providing consumers with high-quality online tax preparation products, which has never been an issue in this matter,” an H&R Block spokesperson told CNET in an email. “We will continue to work through this process with the Commission.”
Read more: TurboTax can no longer call its services free unless they are free for everyone
H&R Block software changes in 2025 and 2026
As part of the settlement, H&R Block will implement changes to its software by 2026 to address some pain points in using the service.
Previous versions of H&R Block software made it difficult for customers to downgrade from a paid tier to the free service. If you were to start your return with H&R Block Deluxe (which currently costs $55 for a federal return and $49 per state return) and realize you can file for free, you should call H&R Block to downgrade or contact a customer service representative via live chat.
If you contact customer service and downgrade, you will have to start over with your tax return. The data you have already entered will not be saved.
As of February 15, 2025, H&R Block is required to allow customers to downgrade levels without contacting customer service. This includes providing an “easily observable and always available way” for consumers to downgrade online, the FTC said. By 2026, H&R Block will also have to return customers to the same point on their tax return after the downgrade so they can continue.
