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[Federal Register Volume 89, Number 221 (Friday, November 15, 2024)]
[Notices]
[Pages 90290-90292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26695]

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FEDERAL TRADE COMMISSION

[Docket No. 9427]

H&R Block; Analysis of Proposed Consent Order To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis of Proposed Consent Order to Aid 
Public Comment describes both the allegations in the complaint and the 
terms of the consent order--embodied in the consent agreement--that 
would settle these allegations.

DATES: Comments must be received on or before December 16, 2024.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the SUPPLEMENTARY INFORMATION section 
below. Please write ``H&R Block; Docket No. 9427'' on your comment and 
file your comment online at https://www.regulations.gov by following 
the instructions on the web-based form. If you prefer to file your 
comment on paper, please mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW, Mail Stop H-144 (Annex T), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Claire Wack (202-326-2836), Attorney, 
Division of Marketing Practices, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec.  2.34, 16 CFR 
2.34, notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of 30 days. The following 
Analysis to Aid Public Comment describes the terms of the consent 
agreement and the allegations in the complaint. An electronic copy of 
the full text of the consent agreement package can be obtained at 
https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before December 16, 
2024. Write ``H&R Block; Docket No. 9427'' on your comment. Your 
comment--including your name and your State--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Because of heightened security screening, postal mail addressed to 
the Commission will be subject to delay. We strongly encourage you to 
submit your comments online through the https://www.regulations.gov 
website. If you prefer to file your comment on paper, write ``H&R 
Block; Docket No. 9427'' on your comment and on the envelope, and mail 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex 
T), Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other State 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.  
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule Sec.  4.9(c). In 
particular, the written request for confidential treatment that 
accompanies the comment must include the factual and legal basis for 
the request and must identify the specific portions of the comment to 
be withheld from the public record. See FTC Rule Sec.  4.9(c). Your 
comment will be kept confidential only if the General Counsel grants 
your request in accordance with the law and the public interest. Once 
your comment has been posted on the https://www.regulations.gov 
website--as legally required by FTC Rule Sec.  4.9(b)--we cannot redact 
or remove your comment from that website, unless you submit a 
confidentiality request that meets the requirements for such treatment 
under FTC Rule Sec.  4.9(c), and the General Counsel grants that 
request.
    Visit the FTC website at https://www.ftc.gov to read this document 
and the news release describing the proposed settlement. The FTC Act 
and other laws the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
it receives on or before December 16, 2024. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, a proposed stipulated Decision and Order (``Proposed 
Order'') to resolve In the Matter of H&R Block Inc., HRB Digital LLC, 
and HRB Tax Group, Inc. (collectively, ``Respondents''). The Proposed 
Order

[[Page 90291]]

has been placed on the public record for 30 days for receipt of 
comments from interested persons. Comments received during this period 
will become part of the public record. After 30 days, the Commission 
will again review the agreement, along with any comments received, and 
will decide whether it should withdraw from the agreement and take 
appropriate action or make final the Proposed Order.
    This matter involves Respondents' advertising and design of their 
online tax preparation products (``Online Products''). According to the 
Commission's complaint, Respondents deceptively market their Online 
Products by representing to consumers that they can file for free using 
H&R Block. In addition, the Complaint alleges that Respondents designed 
their Online Products to encumber consumers attempting to downgrade 
from a more expensive Online Product to a less expensive or free 
product, through two unfair practices: (1) requiring consumers wishing 
to downgrade to first contact customer service to request and complete 
the downgrade (``customer service contact requirement''), and (2) upon 
downgrading, deleting all information the consumer has entered 
(``deletion requirement''). Based on the foregoing, the Commission 
alleges that Respondents have engaged in, and are engaging in, unfair 
and deceptive business practices in the advertising, marketing, 
distribution, and sale of their Online Products, in violation of 
section 5 of the FTC Act, 15 U.S.C. 45.
    The Proposed Order contains injunctive provisions addressing the 
violations alleged in the Complaint and $7 million to redress consumers 
harmed by Respondents' unlawful practices. Section I provides for 
notice to consumers and staggered elimination of the customer service 
contact and deletion requirements, with full elimination of these 
requirements mandated by January 15, 2026. Section I.A. requires 
Respondents to notify upgrading consumers by January 15, 2025, that, if 
they later choose to downgrade, their information will not be saved and 
they will have to start over. This provision will be in place until the 
deletion requirements are eliminated, January 15, 2026. Section I.B. 
sets forth the consumer notice that Respondents must give at the point 
of upgrade, starting January 15, 2026, to describe the new downgrading 
practices. Section I.C. requires that Respondents allow downgrades to 
the same extent they permit upgrades. Section I.D. requires Respondents 
to update their in-product chatbot assistant to permit downgrades 
without requiring the participation of a live agent by February 15, 
2025. Section I.E. of the Proposed Order requires Respondents to 
provide another automated means to downgrade that is easily noticeable 
and persistently available to the consumer within the Online Products 
by January 15, 2026. Section I.F. prohibits requiring the participation 
of a live agent to effectuate a downgrade by February 15, 2025. Section 
I.G. requires that Respondents provide to consumers by January 15, 
2025, clear and easily noticeable instructions on how to downgrade. 
Section I.H. sets forth required changes to the deletion requirement 
that Respondents must implement by January 15, 2026.
    Section II prohibits Respondents from representing that their 
Online Products are free unless such products are actually free to all 
consumers, or Respondents clearly and conspicuously disclose the 
percentage of taxpayers that qualify for the offer. Alternatively, 
Respondents may disclose that the offer is not free for a majority of 
taxpayers. Section III prohibits Respondents generally from 
misrepresenting any material fact concerning the Online Products. 
Section IV includes $7 million to redress consumers who were harmed by 
Respondents' illegal practices.
    Section V contains ancillary provisions necessary to effectuate 
Respondents' payment of the redress amount, while Section VI requires 
Respondents to provide customer information needed for the 
administration of consumer redress. Section VII requires Respondents, 
along with certain employees and successors, to acknowledge receipt of 
the Proposed Order.
    Sections VIII through X of the Proposed Order are reporting and 
compliance provisions, which include recordkeeping requirements and 
provisions requiring Respondents to provide information or documents 
necessary for the Commission to monitor compliance with the Proposed 
Order. Section XI states that the Proposed Order will remain in effect 
for twenty (20) years, with certain exceptions.
    The purpose of this analysis is to aid public comment on the 
Proposed Order. It is not intended to constitute an official 
interpretation of the Complaint or Proposed Order, or to modify in any 
way the Proposed Order's terms.

    By direction of the Commission.
April J. Tabor,
Secretary.

Concurring Statement of Commissioner Andrew N. Ferguson

    Today, the Commission votes to accept for public comment the 
stipulated Decision and Order in In re H&R Block Inc., HRB Digital LLC, 
and HRB Tax Group, Inc (collectively, ``H&R Block''). H&R Block offers 
tax preparation and filing services to assist consumers in filing their 
taxes. The complaint accuses H&R Block of engaging in unfair and 
deceptive business practices relating to its customer-service-contact 
requirements, data-wiping practices, and marketing practices.\1\
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    \1\ In re H&R Block Inc., HRB Digital LLC, and HRB Tax Group, 
No. 9427, Complaint at ]] 56-62.
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    The Commission alleges that H&R Block designed its online products 
to increase the burden on consumers who wanted to downgrade from a more 
expensive version of its tax-preparation product to a less expensive 
version.\2\ H&R Block allegedly required consumers to contact its 
customer service department either by phone or online chat to downgrade 
their products. H&R Block also allegedly deleted all the information a 
consumer previously entered if the consumer decided to downgrade to a 
less expensive product.\3\ Finally, the complaint alleges that H&R 
Block misleadingly marketed a free version of its online tax 
preparation product while knowing that very few consumers were eligible 
to use the free version.\4\
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    \2\ Id. at ] 7.
    \3\ Ibid.
    \4\ Id. at ]] 60-61.
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    I concur in the Commission's order accepting for public comment the 
stipulated Decision and Order against H&R Block. But I have serious 
reservations about the merits of Count III--the deceptive marketing of 
H&R Block's free version of its online tax preparation products. The 
U.S. Court of Appeals for the Fifth Circuit is currently reviewing a 
very similar claim in a different case.\5\ The Fifth Circuit is also 
considering the constitutionality of dual-layer removal protections for 
the Commission's Administrative Law Judges, a question presented in 
this case that has divided the Commission.\6\ I

[[Page 90292]]

withhold my final judgment on the lawfulness of the stipulated Decision 
and Order until I have reviewed public comments and the Fifth Circuit's 
decision, if it issues in time.
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    \5\ Petition for Review, Intuit v. FTC, No. 24-60040 (5th Cir. 
Jan. 24, 2024), ECF No. 1; Br. for Pet'r at 34-54, Intuit v. FTC, 
No. 24-600040 (5th Cir. Apr. 15, 2024), ECF No. 56.
    \6\ See Br. for Pet'r at 27-30, Intuit v. FTC, No. 24-60040 (5th 
Cir. Apr. 15, 2024), ECF No. 56; compare Order Denying Resp'ts' Mot. 
To Disqualify the Admin. Law Judge, In the Matter of H&R Block Inc., 
et al., FTC Docket No. 9427 (Oct. 18, 2024) and Statement of Chair 
Lina M. Khan, Joined by Comm'r Alvaro Bedoya, Concurring in the 
Denial of the Motion, In the Matter of H&R Block, Inc., et al., FTC 
Docket No. 9427 (Oct. 18, 2024), with Statement of Comm'r Andrew N. 
Ferguson, In the Matter of H&R Block, Inc., et al., Dissenting in 
Part and Concurring in the Denial of the Motion, FTC Docket No. 9427 
(Oct. 18, 2024).

[FR Doc. 2024-26695 Filed 11-14-24; 8:45 am]
BILLING CODE 6750-01-P
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