FTC warns tax preparing companies not to use client information for non-tax purposes

FTC warning to tax companies overview: 

• Who: The Federal Trade Commission issued a warning to tax-preparation companies H&R Block, Intuit, TaxAct, TaxSlayer and The Lambo Group, which does business as Ramsey Solutions. 
• Why: The FTC warned the companies that they could be subject to civil penalties if they use or disclose for unrelated reasons the confidential data that they collect from their tax customers.
• Where: Nationwide.  

The Federal Trade Commission (FTC) has issued a warning to five tax-preparation companies they could be subject to civil penalties if they, for unrelated reasons, use or disclose confidential data collected from their customers without their consent. 

The warning notice and its distribution, which the FTC said it voted 3-0 to authorize, was given to tax preparation companies H&R Block, Intuit, TaxAct, TaxSlayer and The Lampo Group, which does business as Ramsey Solutions. 

“Companies that violate (Americans’) privacy by seeking to monetize personal data without consent can face significant financial consequences,” said Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, in a statement. 

The agency said the tax preparation companies could face civil penalties of up to $50,120 per violation if they “misuse personal data in ways that run counter to the original purpose” that the data was collected for. 

FTC warns tax prep companies not to use collected information for advertising purposes

The FTC said its penalty offense authority enables it to seek civil penalties against companies that knowingly engage in unlawful conduct, specifically conduct that has been previously found unlawful in an FTC administrative order that is not a consent order. 

The agency said it told the tax preparation companies that they would be in violation of the FTC Act if they were to use information they collected from customers to advertise, sell or promote their products or services. 

The companies were also warned not to use information that was collected in a context where a consumer would reasonably expect that it would remain confidential for purposes not “explicitly requested” by the individual. 

Finally, the FTC said it would be unlawful for the tax preparation companies to use information they collected — that was expected to be confidential — to obtain financial gain that is separate from the benefit generated by providing the requested product or service. 

In other taxes-related news, a class action lawsuit was filed against Meta Platforms last year by a pair of individuals arguing online tax-filing services have been sending the company sensitive financial information without their customers’ knowledge. 

Has a tax preparation company used or disclosed your confidential data for an unrelated purpose without your consent? What do you think of the FTC warning? Let us know in the comments.

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