Class Action Suit Claims H&R Block Hides Free E-File Service in ‘Bait-and-Switch Scheme’

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A proposed class action case claims H&R Block and two subsidiaries have violated a number of California consumer protection laws by effectively hiding the free electronic federal tax filing feature advertised and marketed as part of its tax preparation software. The two plaintiffs charge that H&R Block claims to offer a “true” free tax-filing service alongside a “bait-and-switch” program designed to “railroad eligible taxpayers” into buying paid services.

The case, which has been removed from superior court to district court in San Francisco, states that defendants H&R Block, Inc.; HRB Tax Group, Inc.; and HRB Digital LLC are required by their participation in the IRS’s “Free File” program to make available free electronic tax filing services to certain eligible taxpayers. The companies are also required to offer the free file service exclusive from any commercial marketing of services in competition with the Free File program, the suit says.

According to the plaintiffs, while the defendants purport to offer a free tax-filing service, the companies affirmatively hide the program from taxpayers and instead aim to divert users to H&R Block’s paid programs. Though these paid programs are represented by the defendants as “free,” the suit says, they decidedly do not provide the same service as H&R Block’s True Free File Service, which the plaintiffs say the defendants have made it difficult for taxpayers to get to. All of this is done without search engines being any the wiser, the plaintiffs claim. From the complaint:

“Defendants’ Fake ‘Free’ Offer is a lure Defendants use to ensnare unsuspecting taxpayers. At the same time, Defendants take steps to hide the existence of Defendants’ True Free File Service, including intentionally hiding it from search engines and depressing its search rankings. This is essentially a bait-and-switch scheme: Defendants use deceptive, misleading, and unfair marketing and tactics to divert taxpayers from the true IRS Free File program into their Fake ‘Free’ Offer (or to pages promoting it), and then Defendants tell taxpayers who are eligible for free filing under the IRS Free File program that they have to pay for Defendants’ tax preparation services.”

The complaint goes on to state that though the majority of taxpayers fit the criteria necessary to file their federal tax returns for free, only a small portion of taxpayers check all the boxes for filing a free return with H&R Block’s apparently fake “free” filing program. Once H&R Block lures a taxpayer into their ostensibly free filing program, the individual is then told that they must pay for services that they in truth do not need. For instance, for consumers who are able to make it to the landing page of the defendants’ True Free File service, those over the age of 51 will be told that they’re generally ineligible for H&R Block’s True Free File Service, even though, the lawsuit says, they’re eligible to file their taxes for free under a number of other services that participate in the IRS Free File program.

The suit is the latest in a wave of cases that look to expose companies like H&R Block and fellow tax prep outfit Intuit over their alleged practice of suppressing access to their IRS-mandated free electronic tax-filing features.