The Federal Trade Commission says H&R Block has used deceptive marketing practices in its free file program.
The FTC sent a complaint to H&R Block, accusing it of "unfairly deleting consumers’ tax data and requiring them to contact customer service when they downgrade to more affordable online products, and deceptively marketing their products as 'free' when they were not free for many consumers."
The FTC says one example of how H&R Block makes it difficult for customers to use its free file program is how information is stored. If filers put in their information while using a paid version of the software but then decide to switch to free file, that information is lost. However, if a customer using the free version switches to a paid version, that information is saved.
The FTC also says H&R Block has not always made it clear that the free filing advertised is only available for those with "simple" returns.
“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.”
SEE MORE: IRS launches taxpayer-funded pilot tax-filing program
The FTC's complaint orders H&R Block to respond to the allegations by October.
Officials could impose numerous restrictions to how H&R Block markets its free file programs, including a prohibition against employing a more complicated process to downgrade online products than upgrade.
The complaint comes nearly a year after the FTC reached an agreement with TurboTax over how it marketed a free file tax program. The company was ordered to pay $141 million to over 4 million customers who TurboTax allegedly deceived.
TurboTax no longer participates in the Internal Revenue Service's free file tax program.
The IRS continues to partner with several companies that offer free filing programs. A list is available on the IRS website.
The IRS is also piloting its own free online filing service for American taxpayers this tax season for residents of 13 states.
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