Jackson Hewitt files suit against H&R Block


It looks like the crux of the suit stems from H&R Block claiming that its Second Look Review program, which reviews past tax returns prepared by other tax firms, found that two-thirds of returns prepared by Jackson Hewitt contained mistakes.

“H&R Block’s 2 out of 3 claim necessarily implies the false claim that two out of three Jackson Hewitt customers who are entitled to refunds have been short-changed due to Jackson Hewitt errors or incompetence,” the complaint filed in Manhattan federal court said.

Jackson Hewitt is asking the court to issue an emergency injunction stop the new campaign that it said disparages Jackson Hewitt’s competence. Saying the campaign is causing “irreparable harm,” Jackson Hewitt is also seeking compensatory and punitive damages.

H&R Block’s ads “are designed to undermine trust in Jackson Hewitt,” Jackson Hewitt CEO Philip Sanford said in a statement. The suit also said H&R Block has dropped “disparaging” pamphlets inside Jackson Hewitt’s offices.

Lastly, the suit also revolves around refund anticipation loans, which give customers their refunds on the spot, for a fee. Jackson Hewitt claims H&R Block also gives its agents a script designed to deceive them about the service. Jackson Hewitt said that unlike H&R Block, it also offers taxpayers access to as much as $1,500 within one day.

Of course, this is primetime for tax return service ads, as February to April accounts for some three-fifths of annual revenue and profit. Media Monitors supplied info on the most recent week’s ad runs (1/24-1/31) for radio, broadcast TV and cable. H&R Block ran 39,056 ads in radio; Jackson Hewitt ran 4,188 spots. For broadcast TV, H&R Block ran 17,435 ads, vs. Jackson Hewitt’s 4,933. For spot cable, H&R Block ran 23,421 ads, compared to Jackson Hewitt’s 4,010 ads.

RBR-TVBR observation: The numbers show that H&R Block ran plenty of these ads across the three media measured. The damage to Jackson Hewitt should be measurable by comparing this year’s customer numbers during the campaign vs. last years’, combined with trending over the last few years. However, curiously, an H&R Block spokeswoman was quoted as saying the suit was filed without any requests for substantiation and that H&R Block stands behind their ads and will vigorously defend its claims. One would think that any judge would need evidence of where these claims came from to make an informed decision. It could all boil down to the wording of the ads. Perhaps every two out of three taxpayer entitled to refunds has been short-changed just in general, and H&R decided to point that figure at Jackson Hewitt.