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H&R Block reached the settlement with the Federal Trade Commission, the agency announced in a news release on Wednesday, Jan. 8. The order requires the company to revamp its services and pay $7 million to compensate its customers.
The settlement stemmed from a February 2024 complaint accusing H&R Block of forcing users to contact customer service to downgrade products. The tax filer was also accused of erasing previously entered data and falsely advertising "free" tax filing.
By Saturday, Feb. 15, H&R Block must let customers downgrade products using automated tools, such as chatbots, without speaking to live agents. The changes aim to streamline the process and eliminate hurdles for consumers.
The order also mandates that H&R Block stop erasing users' data when downgrading to a less expensive product. By the 2026 tax season, the company must ensure taxpayers can save time by picking up their filing process where they left off before upgrading.
H&R Block must also provide clear disclosures in "free" tax filing advertisements. Ads must either reveal the percentage of taxpayers eligible for free products or clarify that most taxpayers don’t qualify.
The FTC voted unanimously, 5-0, to finalize the settlement after receiving three public comments.
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