On January 8, the FTC finalized an order requiring a tax preparation company to implement the terms of a settlement and mandating the company pay $7 million to compensate consumers affected by the company’s practices regarding product downgrades. As previously covered by InfoBytes, the FTC charged the company in March 2024 with unfairly (i) requiring consumers to contact customer service to downgrade to a cheaper product, (ii) deleting users’ previously entered data, and (iii) making allegedly deceptive claims about “free” tax filings.
Under the settlement, the company must simplify the process for consumers to downgrade products by February 15, 2025, allowing them to use a chatbot or other automated means instead of contacting customer service by phone or live chat. By the 2026 tax filing season, the company is required to stop deleting consumers’ previously entered information when a consumer downgrades to a less expensive product and ensure that consumers can use the previously entered data to resume filing using the downgraded product. Additionally, the company must disclose in its “file for free” advertisements the percentage of taxpayers who are eligible to use any “free” products or that most taxpayers do not qualify. The FTC approved the final order with a unanimous vote.
