Free file fiasco: Deceptive ads, hidden costs, and data deletion


The word 'free' is quickly becoming 'free’ish,' or 'sometimes free'

Is there a tax preparation service that consumers – or the Federal Trade Commission (FTC) – don't have an issue with?

Well, it’s not TurboTax or Block, that’s for sure. The FTC recently threw the book at the company for its claims of “free” services. So have ConsumerAffairs reviewers. And Block?

ConsumerAffairs readers have expressed issues with the software, including glitches, incorrect calculations and the inability to file certain forms. Also, customer support has been described as unhelpful and unresponsive, with long wait times and dropped calls. 

Now, Block and TurboTax can have a pity party together. The FTC says that Block – like TurboTax – deceptively markets ‘free’ online filing, too, not to mention unfairly deletes a person’s tax data when they attempt to downgrade to more inexpensive products.

The complaint outlines a number of advertisements by H&R Block on TV and online promoting that consumers can file for “free” with the company… like this:

The agency’s concern? That the ads contain language saying — sometimes squeezed in in fine print — that the “free” offer applies only to “simple returns.” 

Asterisks and “just so you know” small print can get cleared sometimes by the FTC, but in these, the agency claims that the ads do not explain what a “simple return” is.

Read ‘em and weep

In an administrative complaint, the FTC contends that H&R Block’s online tax filing products try to nudge consumers into higher-cost products – the kind made for more complicated tax filings like businesses and people with tons of deductions – even though many of those consumers wouldn’t use those additional tax forms and schedules if their lives depended on it. 

“H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Today’s action demonstrates that companies using coercive techniques that harm consumers can expect to hear from the FTC.” 

Another thing that ticked off the FTC is that when consumers later realized they did not need or want those more expensive products, Block brought out a dance of time-consuming challenges to try and deter a customer’s opt-outs.

'Hello, I’d like to talk to…' 

Specifically, when consumers choose to downgrade, H&R Block requires consumers to contact its customer support via chat or phone. Of course, that’s a dead end.

“I've spent way too much time trying to get this to work. The ibot can't answer simple questions, if you can get anyone on the phone they can only read to you what the ibot says. It's completely useless!,” Angel of Louisville Ky., wrote in a ConsumerAffairs review. “When you ask to speak to a supervisor or someone else, you will wait for hours until you just hang up. They'll wait you out.”

But if you’re stubborn enough and cross the line with Block, the FTC says that its system just might delete all the tax data the consumers have entered, requiring them to start their tax return from scratch, creating a significant disincentive to downgrading. 

“This stands in contrast to the upgrade process, where consumers’ data seamlessly moves to the more expensive product instantly,” the agency said.

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