SAN FRANCISCO (CN) — Taxpayers slapped Meta, Google and H&R Block with a sprawling RICO class action Wednesday, claiming that a “shocking breach” coordinated by the companies resulted in scraping taxpayers’ private information for profit.
In a 49-page complaint, the plaintiffs say the international firm H&R Block used customers’ private income and financial records to help train Google and Meta’s algorithms and create targeted ads. H&R Block prepares more than 20 million tax returns annually, and per the Internal Revenue Code may not disclose any information it collects for any purpose other than to prepare a tax return.
The plaintiffs claim the firm carried out a coordinated plan to install spyware and give Meta and Google access to virtually all customer information. They say that customers' addresses, income, filing statuses, birthdates and dependents were all leaked for the companies to use to sell lucrative targeted advertising.
The companies failed to adequately warn consumers about their data being sold through privacy policies, misleading them in order to use the data for financial gain, the plaintiffs say. They note Meta recommends that tax preparation companies install the Meta Pixel on every page where they will be tracking visitor actions, to begin collecting and placing information about every user and their activities into a “dossier” of data to be used later.
More than 200 million Americans, or 80%, filed their tax returns electronically in 2022, the plaintiffs add. Many other countries offer free government-run electronic tax return filing services, but the United States does not. The tax preparation industry has fought against implementing any free tax return filing system, including H&R Block — which has spent more than $40 million dollars since 1998 on federal lobbying to preserve its tax business profits.
The plaintiffs filed the federal class action in the Northern District of California and are represented by Wisner Baum, LLP, Pendley, Baudin & Coffin LLC and Coffin Law LLC. They seek damages from the three firms under the Racketeering Influenced and Corrupt Organizations Act, claiming that the three companies’ conduct constitutes a massive “pattern of racketeering activity.”
“People have become more aware of issues like online privacy violations and identity theft in recent years, but it’s still shocking to see a household name like H&R Block being so reckless, and so flagrantly violating the law,” said Harrison James, a Wisner Baum attorney. “People gave H&R Block Social Security numbers, income information, and bank statements for tax prep, not to sell to the highest bidder.”
R. Brent Wisner, Wisner Baum’s managing partner, added: “Most people would never post their kids’ college account or their retirement savings on Facebook, but H&R Block did something just like that when they handed customer income tax information over to a bunch of advertisers. It’s like your income tax guy handing your pay stubs and tax returns over to a marketing firm. H&R Block, Google, and Meta ignored data privacy laws, and passed information about people’s financial lives around like candy.”
Media representatives for the three companies named in the litigation did not respond to requests for comment before press time.
The lawsuit follows a July 2023 congressional report which found “a shocking breach of taxpayer privacy” confirming that tax preparation companies shared millions of customers’ personal and financial information with Meta and Google.
The report said the companies helped tax prep firms place “pixels” on websites where customers entered tax information, to collect that data. It called firms like H&R Block “shockingly careless with their treatment of taxpayer data” and detailed Meta’s Pixel's default settings providing “a broad set of sensitive information, from taxpayer reporting rental income to alimony.”
In 2020, Meta had close to $86 billion in advertising revenue, around 97.9% of its total revenue. By 2022, the Facebook parent had $116 billion in revenue with over $113 billon from advertising.
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