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Round One to Happy Tax in Suit Against H&R Block


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Mario Costanz is CEO and founder of Happy Tax.

Happy Tax, the upstart tax preparation franchise, filed a false advertising lawsuit against H&R Block on Tuesday, claiming the tax prep giant makes false and misleading representations in its advertisements. 

Citing the Lanham Act, the lawsuit claims Happy Tax was the “first notable national company” to introduce an “innovative pricing strategy” that listed prices upfront for its assisted CPA prepared tax preparation services. Historically, the industry provided prices to clients after their tax returns were completed, according to Mario Costanz, Happy Tax founder.

“When someone says they’re the only one doing something that you essentially brought to the industry years ago, it’s not cool. And we’re cool,” said Costanz. “We want everybody else to be cool too, so we’re going to hold them accountable.”

He said a hearing was held Wednesday evening in which Happy Tax sought an injunction against H&R Block to stop the ads. “Interestingly enough at the hearing, they brought some new information to us, which was they have taken the ads down. And, they have agreed to not put out any more ads stating they’re the only ones offering that,” he said, adding his lawyers will monitor what happens next. “The case is still active, and we’re going to make assessments as to if they have stopped all that advertising, and if they are authentic in what they said.”

H&R Block’s advertising says upfront pricing is available “only from H&R Block,” the lawsuit says. Costanz said he had tried to resolve the matter amicably by bringing the claims to both H&R Block’s CEO and its general counsel. 

On January 8, counsel for Happy Tax sent H&R a letter demanding it “cease and desist” the airing of the “false” television commercial. In a response dated January 11, H&R Block said via letter it would not take down the ads, said the lawsuit, filed January 15. A request for comment to H&R Block was not returned.

Happy Tax ads use the headline “Our Fair, Upfront and Transparent Pricing,” and show $100 for starter services, $200 for standard, $300 for moderate and $500 for premium. 

The lawsuit includes screenshots from H&R Block dated October 29, 2018, advertising its “New Upfront Transparent Pricing,” and using the words “only at H&R Block.” “We’re turning things upside down with upfront pricing,” the ads say.

Happy Tax has sold 165 franchises in 32 states. H&R Block had 11,701 total units and an estimated $3.14 billion in systemwide sales in 2017, according to the Franchise Times Top 200+. 

 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
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