You're three hours into your taxes. Your eyes are blurry from staring at W-2s and 1099-NECs, and suddenly, a pop-up tells you that to finish, you need the "Premium" version for an extra $85. You realize you clicked the wrong thing miles back. You just want to go back to the basic version.
In the old days—like, literally last year—H&R Block would basically hold your data hostage. If you wanted to downgrade to a cheaper plan, they made you jump through hoops that would make a circus performer sweat. You had to call a customer service line, wait on hold, and then? They’d wipe every single piece of data you’d already typed in.
Starting over from scratch or paying the $85? Most people just paid the "convenience tax."
The Federal Trade Commission (FTC) finally got tired of it. They stepped in with a massive hammer, and the resulting ftc h&r block changes are fundamentally shifting how you’ll experience tax season in 2026. This isn't just about a $7 million fine, which, let’s be honest, is couch change for a company that makes billions. It’s about forcing a giant to stop using "dark patterns" to trick you into overpaying.
Why the FTC H&R Block Changes Had to Happen
Honestly, the FTC’s complaint read like a horror story for anyone who hates admin work. They accused H&R Block of intentionally designing their software to be a one-way street. Upgrading? Easy. One click and you’re in a more expensive tier. Downgrading? That was the "obstacle course of tedious challenges," according to Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection.
The agency found that H&R Block was using a specific tactic: the "data wipe." If a consumer realized they didn't actually need the "Self-Employed" edition and tried to move back to "Deluxe," the system would delete their progress. We aren't just talking about your name and address. We’re talking about every line item, every deduction, and every meticulously entered receipt.
It was a brilliant, if unethical, way to ensure people stayed in the higher-priced tiers.
The "Free" That Wasn't Really Free
Another big part of the ftc h&r block changes involves how the company talks about its "Free Online Product." For years, the marketing was "Free, nada, zilch." But the FTC pointed out that the definition of a "simple return" (the only kind that qualifies for free) was basically a moving target.
H&R Block would change what forms were included in "simple" from year to year without clearly telling people. You’d get halfway through, find out your specific form wasn't "simple" anymore, and get hit with a fee.
What's Actually Changing for You
The settlement, which was finalized in early 2025, isn't just a suggestion. It’s a mandate with a timeline. If you’re filing your taxes right now, you’re seeing the first wave of these protections.
The Chatbot Escape Hatch: As of February 15, 2025, H&R Block had to stop forcing you to call a live human to downgrade. You can now use an automated chatbot or a simple menu option to move to a cheaper product. No more "please stay on the line for the next available representative" while you're just trying to save twenty bucks.
The End of the Data Purge: This is the big one. By the 2026 tax season, the company is required to stop deleting your data when you downgrade. If you move from a $100 plan back to a $50 plan, you should land right back where you were in the filing process.
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Honest Advertising: You'll notice the ads look a bit different now. The FTC is making them disclose exactly how many people actually qualify for "free." Usually, they have to say something like "Only X% of taxpayers qualify" or "The majority of taxpayers do not qualify." It’s a reality check before you even click the link.
The $7 Million Refund: Where is the Money?
You've probably heard about the $7 million settlement. It sounds like a lot, but when you spread it across years of affected customers, nobody is getting a new car out of this.
The money is specifically earmarked for "consumer redress." This means the FTC is using it to pay back people who were harmed by these practices—those who were forced to overpay because they couldn't figure out how to downgrade or because they didn't want to lose their data.
If you were one of those people, keep an eye on your inbox. The FTC typically manages these refunds directly or through a third-party administrator. You usually don't have to "sign up" for it if the company already has your records on file as someone who upgraded and then tried (and failed) to downgrade.
Is This Enough to Fix the Industry?
Kinda, but it's a game of whack-a-mole.
H&R Block isn't the only one under the microscope. Intuit (the makers of TurboTax) famously settled for $141 million a few years back for similar "free" filing deceptions. The whole industry has been built on the idea of making the "free" door very hard to find.
The ftc h&r block changes are a win, but they also highlight why the IRS has been pushing its own "Direct File" system. If the private companies won't play fair, the government is increasingly willing to provide a competing product that doesn't have a "Premium" button.
What Most People Get Wrong About These Changes
A lot of people think this means H&R Block is now "free for everyone." That is definitely not the case. You still have to pay if your tax situation is complex—like if you have rental income, crypto trades, or a small business.
The change isn't about the price; it's about the transparency and the exit ramp. You have the right to change your mind without being punished by a software algorithm that deletes your hard work.
How to Protect Yourself This Tax Season
Now that you know the rules of the game have changed, you can be a bit more strategic.
- Check the "Price List" first: Don't just click "Start for Free." Look for the link at the bottom of the page that lists which forms are included in each tier. If you have an HSA (Health Savings Account), for instance, you almost always have to pay.
- Test the Downgrade: If you feel like you're being pushed into a higher tier, try to use the chatbot to move back down immediately. If the software makes it hard, take a screenshot. The FTC loves a good paper trail.
- Look at Direct File: If you live in a participating state and have a relatively simple return, the IRS Direct File tool is literally free. No upsells. No data traps.
The ftc h&r block changes represent a rare moment where the "little guy" actually got some leverage back. Tax season is stressful enough without a software company trying to gaslight you into thinking you can't go back to a cheaper plan.
If you're ready to file, your next step should be to head over to the official FTC website's consumer alert section to see if you're eligible for a slice of that $7 million refund. You can also compare this year's H&R Block "Product Selector" page to the IRS Direct File eligibility tool to see which one actually saves you more time and cash.