H&R Block Accused of Using Taxpayer Info

Consumers Union and several other consumer groups have accused H&R Block of using taxpayer information gathered in the IRS Free File program to market mortgages to individuals.

The groups sent a letter to the U.S. Treasury Department, alleging that Block used the data to feed pop-up ads to taxpayers.

Addressed to Pamela F. Olson, the FTC’s assistant secretary for tax policy, the letter claims that a consumer who entered mortgage interest on his tax form received a pop-up. The ad stated, “We noticed that you entered an itemized deduction for home mortgage interest. By refinancing your mortgage you may be able to lower your monthly payments or pay off other debts.”

Consumers are required to click “yes,” “no,” or “contact me later” to return to tax preparation, the letter continues.

The groups also contend that Block’s Free File Web site requires consumers to waive IRS privacy protections and permit use of personal tax data for cross-marketing purposes, in violation of IRS restrictions.

Calls to H&R Block were not returned at deadline. However, a company spokesperson told the Washington Post that “The consumer group’s claims are inaccurate–H.R. Block’s offer through the Free file alliance does not require clients to ‘waive IRS privacy protections’.”

The groups include the Consumer Federation of America, the Electronic Privacy Information Center, National Consumer Law Center and U.S. Public Interest Research Group.

The letter also contends that Block requires all Free File taxpayers to agree to cross marketing, and that Block failed to disclose that it owns H&R Block Mortgage and Option One, a vendor of subprime mortgages.

“We are especially concerned that confidential tax information is being used to sell mortgages, including potentially high cost subprime mortgages,” said Chi Chi Wu, an attorney with the National Consumer Law Center in a statement.

Wu added that there are at least two predatory lending lawsuits involving Block Option One subsidiary.

The letter states that “this new level of marketing, based on information a taxpayer enters into his tax returning using Free File, is extremely troubling and requires enforcement action by Treasury and the Internal Revenue Service.”