The Federal Trade Commission fined H&R Block (HRB) $7 million and required the tax services company to stop advertising and customer service practices it called "unlawful" by the 2025 tax filing season.

Federal regulators had said in a 2024 complaint that the company had unfairly required customers to contact customer service to downgrade to a cheaper product, and would delete customers’ previously entered tax prep data once they downgraded. The company had also made misleading claims about its free products in advertisements, the government said.

Along with a $7 million fine, which will be used to “compensate consumers harmed by the company’s unlawful practices,” the FTC on Wednesday said that H&R Block must offer customers the option of a chatbot or other automated means to more easily downgrade their service by Feb. 15, and provide "an easily noticeable and always available way for consumers to downgrade" by the 2026 tax season.

“H&R Block prides itself in providing consumers with quality online tax preparation products, which has never been an issue in this matter,” the company said in a statement to Investopedia News. “Many of the changes in the settlement have either already been made or are in process.”The settlement requires the tax company to stop deleting previously entered tax prep data when a customer downgrades their service. And H&R Block was ordered to disclose in advertisements about its free products the amount of taxpayers who are eligible to utilize its free services.

H&R Block shares were recently up more than 1%.