H&R Block, one of the largest providers of online tax services, has long marketed its products as having “no upfront fees” and “free” preparation and e-filing of taxes. This phrasing appears in advertisements and in marketing materials for the “Freebie” version of its site. But these terms apply only to the “basic” version of the company’s products. This means customers—both consumers and small businesses—who have paid the company anywhere from a few dollars to $450 for the service of preparing their returns, are eligible for the “basic” service.
Make no mistake: H&R Block’s use of the word “free” to describe the “basic” service has been a source of confusion to tax return preparers and taxpayers. Certainly, tax preparers and customers rely on these terms to help them decide whether to use the product. Moreover, these terms have been commonplace across the Internet for a long time. Since the 1990s, Microsoft used the phrase “free” to describe its own free software offering.
But the use of the term “free” has really struck a nerve on the Internet over the past year. First, the term was used in an ad for TurboTax last year. Then, in mid-February, a spokesperson for H&R Block issued a statement on the company’s website saying that “Taxpayers who take full advantage of their tax preparation products don’t have to worry about paying fees and do not pay them upfront.”
Again, that is only a retraction. If the company really wanted to pull back the curtain on how its marketing campaigns work, it could announce tomorrow that TaxCut is returning to its pre-2012 practice of charging up to $450 per return.
Alas, it won’t. H&R Block probably believes that continuing to advertise its products as “free” and “basic” will once again help it maintain its share of the online tax preparation market against the other leading brands in the industry. What’s more, it hasn’t hesitated to do so in the past. I spent my first decade in tax preparation work working for Price King Tax in Irvine, California, an online services provider that was owned by a major competitor of H&R Block. A great source of confusion was the company’s long-standing claim that TaxCut was “free”—an effective strategy that appeared in its marketing materials even as its advertisements depicted the service as “free.” Even in 2010, several years after it launched TaxCut, H&R Block’s chief marketing officer described TaxCut as “free.”
H&R Block has long used “free” and other terms that seem to suggest the company offers a free product. That’s changing. With “basic” now in the company’s advertising—and retracting “free”—H&R Block is being forced to address a misleading practice that has surrounded its products for years. I’d like to know how the company plans to stop using these misleading words to describe its products. If it doesn’t, I encourage someone at H&R Block to get back to me.