H&R Block Class Action Lawsuit
Wisner Baum Files First RICO Class Action Against H&R Block, Meta, and Google
In September of 2023, Wisner Baum filed a class action lawsuit under the Racketeer Influenced and Corrupt Organizations (RICO) Act against tax preparation company H&R Block and technology giants Meta (Facebook) and Google. The proposed class action—the first filed under RICO against these companies—alleges Meta, Google, and H&R Block violated taxpayers’ privacy rights by illegally collecting and sharing sensitive tax data without consent to maximize profits through direct-to-consumer advertising.
Attorneys filed the suit after a government report released in July of 2023 showed that H&R Block and other tax preparation companies “recklessly shared tens of millions of taxpayers’ sensitive personal and financial data with Meta for years, without appropriately disclosing this data usage or protecting the data, and without appropriate taxpayer consent.” Meta confirmed that it utilized this data to target ads to taxpayers and to train the company’s AI algorithms. The report recommended regulatory and criminal investigations as the attacks on privacy appeared “to represent a violation of taxpayer privacy laws.”
The RICO class action lawsuit accuses H&R Block, Meta, and Google of colluding together to create a “pattern of racketeering activity” on “a massive scale” to intercept and transmit highly private and protected tax data to enhance their bottom lines. Racketeering is broadly defined as a “pattern of illegal activity carried out as part of an enterprise that is owned or controlled by those engaged in the illegal activity.” According to the complaint, the tax data collected by the defendants included gross income, dependents, tax credits and deductions, addresses, emails, gender, and more.
Wisner Baum class action attorneys Harrison E. James and the firm’s managing partner, R. Brent Wisner, filed the complaint in U.S. District Court, Northern District of California on behalf of a plaintiff from California, who filed his taxes using H&R Block’s online tax filing service from 2018 to 2023. The firm is working with co-counsel Chris Coffin of Coffin Law, LLC and Jessica Reynolds of Pendley, Baudin & Coffin, LLC. The case number is Case 3:23-cv-04953.
“The reckless actions of H&R Block, Meta, and Google violated taxpayers’ rights and betrayed the public trust,” says class action attorney Harrison E. James. “Our client believed H&R Block would protect his sensitive tax information, not enable tech companies to exploit that information for profit.”
“The vast majority of Americans rely on companies like H&R Block to file their taxes electronically,” says class action attorney R. Brent Wisner. “One of the reasons H&R Block has been able to maintain a stranglehold on this industry is they prey on people’s sensitive data and use it to gain more customers, all at the expense of the people they are supposed to be serving.”
According to the complaint, had the class representative known that H&R Block was sharing highly sensitive tax data with Meta and Google, he never would have purchased or paid for H&R Block’s tax preparation services. The proposed class action seeks trebled damages based on the counts:
- Count I: RICO Violation
- Count II: RICO Conspiracy
- Count III: Violation of the Internal Revenue Code
- Count IV: Violation of the Federal Wiretap Act
- Count V: Violation of the California Invasion of Privacy Act (CIPA)
H&R Block RICO Class Action Allegations
The complaint alleges that H&R Block embedded code systems on the company’s website that effectively act as “spy cams,” operating secretly and quietly within the background of the website to collect massive amounts of user data information. For Meta, the code system is known as the “Meta Pixel.” For Google, the code system is known as “Google Analytics.”
As a person uses the H&R Block website, the Meta Pixel and Google Analytics allegedly intercept, collect, and transmit data back to Meta and Google respectively. This data can include, but is not limited to, a person’s name, social security number, address, adjusted gross income, filing status, refund amount, deductions, dependents, income properties, date of birth, health savings account contributions, education expenses, and more. Meta and Google allegedly used this data to better understand consumer behaviors, measure the performance of ad campaigns, and directly target consumers with additional advertising, all for the ultimate purpose of monetizing the data.
According to the complaint, H&R Block was well aware that the interception, collection, recordation, and transmission of highly sensitive tax information to third parties like Meta and Google was illegal. Despite this knowledge, the complaint alleges H&R Block willingly installed Meta’s Pixel and Google Analytics onto its website for the express purpose of allowing Meta and Google to gather sensitive information while providing H&R Block with the benefit of insight into consumer traffic and advertising for its own monetary gain.
As a tax preparer under federal law, H&R Block is governed by the Treasury Regulations and Internal Revenue Code, which sets penalties for the disclosure of tax return information. H&R Block expressly stated in its privacy policies that it would only “disclose information as permitted by law or with your [taxpayer] consent.” The company further assured taxpayers that it would not disclose their tax information to third parties for marketing purposes without the taxpayers’ express consent. But the lawsuit alleges H&R Block never revealed to taxpayers that their tax data was being intercepted and transmitted to Meta and Google, nor did H&R Block reveal to consumers the purpose for which their data was being transmitted—for tremendous profits generated by the collection of such data for use in marketing.
Meta (Facebook) RICO Class Action Allegations
The complaint alleges Meta has made “numerous” misrepresentations regarding its privacy policies. For example, Meta has claimed that developers, such as H&R Block, would not be permitted to transmit sensitive information of any kind, including personal financial information. But attorneys believe Meta’s representations to consumers about its safeguards and policies designed to prevent the transmission of sensitive personal information are a ruse that misleads consumers into a false sense of security, all while Meta harvests sensitive data and then uses it for its own financial gain.
Meta made these misleading statements, the lawsuit says, even though the company readily admitted that it could not guarantee for what purposes it might use the data it collected. An internal memorandum from April of 2022 reveals that Meta does not do an adequate job of ensuring data privacy. In the document, a Meta employee writes: “[w]e do not have an adequate level of control and explainability over how our systems use data, and thus we can’t confidently make controlled policy changes or external commitments such as ‘we will not use X data for Y purpose.’”
Meta says in its policies that it does not “want or permit” users of its Pixel to share sensitive financial information, but an article published last year in The Markup argues that Meta failed to adequately police the data it receives, resulting in “repeated, documented violations of Meta’s own contractual promises and state and federal law.”
Virtually all of Meta’s revenue is generated by its third-party advertising, which is effective due to its ability to track consumer behavior and then sell such information for profit. In 2022, Meta generated over $116 billion in revenue with over $113 billion coming from advertising.
Google RICO Class Action Allegations
The class action complaint alleges Google, like Meta, made numerous misrepresentations about privacy. For example, lawyers say Google readily represents that it will not use personal identifying information to target consumers unless they have the consumer’s express consent. Google further assures consumers and businesses that it is against their policies to use sensitive information to target advertisements. However, the class action alleges Google does not actually enforce these policies and it permits clients such as H&R Block to track any data they desire through the use of Google Analytics. Additionally, Google admitted that it never attempted to terminate H&R Block’s account even though tax preparation companies were sharing highly sensitive tax information with Google.
As with Meta, most of Google’s revenue is generated via targeted advertising fueled by users’ personal information. Without Google’s superpower of harvesting massive amounts of data to tailor advertising efforts for its business customers, the lawsuit states that Google “would not be the exceptionally wealthy and powerful company that it is.”
If you believe you could be a potential class member, please fill out this form.
What is a Class Action Lawsuit?
A class action lawsuit involves one or more individuals who file a claim on behalf of other people with similar claims. The people who file the class action are known as “class representatives.” Other people who are included in the class action are referred to as the “class” or “class members.” In class action litigation, one court resolves the lawsuit for all class members, except for those who decide to opt out from a settlement.
How Does a RICO Class Action Work?
Rather than filing individual lawsuits against the defendants, one or more plaintiffs can file a proposed class action lawsuit under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal law designed to combat organized crime. The class action is “putative” until a judge certifies the class. The process can take a year or more.
In a civil RICO case, the plaintiff(s) must prove, among other things:
- Racketeering Activity. Plaintiff(s) must prove that the defendant(s) committed any of the enumerated RICO crimes, which can include mail fraud or wire fraud.
- Pattern of Racketeering Activity. Plaintiff(s) must prove a pattern of at least two crimes. The pattern is required to be either related in some way (same victim, same methods of committing crimes, same participants) or continuous (the crime was committed for a year or more).
A civil RICO class action is a significant piece of litigation because it offers the exposure of treble damages, which means that plaintiffs harmed by a RICO violation who bring a successful civil suit can receive triple the amount of actual/compensatory damages.
Can I Join the RICO Class Action Lawsuit Against H&R Block?
Currently, the case is a putative class action, which means that a judge has not yet certified the case to proceed as a class. Once the class is certified, class members will be notified of their rights and options. If money or benefits become available, class members may have to take certain steps, such as submitting a claim form, in order to get their shares. If so, class members will be notified of any additional steps they must take. For now, though, potential class members can stay informed of the progress of the case by checking this page for litigation updates and by submitting your information in the contact form on this page.
Are There Other H&R Class Action Lawsuits?
Yes. H&R Block has been named as a defendant in multiple class action lawsuits related to sharing confidential tax data. In addition to H&R Block, the other class actions also name TaxAct and TaxSlayer as defendants. These class actions make similar allegations to our case above, though none were filed under RICO. Additionally, our case also alleges class claims under the Internal Revenue Code, the Federal Wiretap Act, and the California Invasion of Privacy Act, seeking certification of both a national and a California class.
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