The US Federal Trade Commission (FTC) is pursuing legal action against tax consultant, H&R Block, for allegedly engaging in unfair practices related to consumer tax data and deceptive marketing strategies.
The complaint filed by the FTC on Friday (23 February) highlights concerns about H&R Block’s treatment of consumers that were attempting to downgrade to more affordable online products, coupled with misleading promotions of their so-called free-of-charge services.
According to the complaint, H&R Block stands accused of steering consumers towards higher-cost options designed for more complex tax filings, even when those additional features were unnecessary.
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The complaint also contends that H&R Block failed to provide clear information about which forms, schedules, or tax situations are covered by its various products, leading many consumers to unintentionally opt for more expensive options.
The FTC alleges that when consumers realised they did not need the pricier products and attempted to downgrade, H&R Block imposed a series of challenges.
For example, consumers are required to contact customer support, and upon doing so, their entered tax data is deleted, compelling them to restart the tax return process. This contrasts with the smoother data transfer during the upgrade process.
Director of the FTC’s Bureau of Consumer Protection, Samuel Levine, stated, “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 complaint also addresses deceptive advertising practices, asserting that H&R Block has been marketing its online tax preparation services as ‘free’ while many consumers are not eligible for the free offerings.
The FTC has also finalised an order with prison communications provider Global Tel*Link and its subsidiaries over data mismanagement that led to a breach of sensitive data.
In August 2020, the company and a third-party vendor copied vast amounts of unencrypted personal information about nearly 650,000 real users to test new into the cloud but did not take steps to protect the data, the FTC alleges.
The order requires Global Tel*Link to implement a comprehensive data security program, including measures to minimise human error, the use of multifactor authentication, and notification procedures for affected users in the event of future security incidents.
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