Intuit Countersues H And R Block In Advertising Dispute

by Glen Shapiro, LawAndTax-News.com, New York

07 February 2006

Intuit Inc. last week filed its answer and counterclaims of fraud and false advertising against H&R Block in federal district court in Kansas City.

The counterclaims are part of the company's defense of its TurboTax ad campaign, which was recently challenged in court by H&R Block.

H&R Block had refuted its competitor’s claim that its tax preparation software prepared more tax returns than in H&R Block’s offices.

H&R Block requested that Intuit provide supporting data and took its competitor to court earlier this year when Intuit failed to adequately respond.

Rather than continue to contest this issue in court, Intuit agreed to change its commercials, and the US District Court for the Western District of Missouri confirmed that agreement with an order requiring Intuit to do so.

"We built our advertising campaign around the number of returns that Block publicly reported," explained Brad Henske, senior vice president and general manager of Intuit's Consumer Tax Group.

"But in the last three weeks, Block provided new and contradictory numbers. We agreed to modify our ad after viewing these figures that Block provided to the court. Block then went back to court to have those new numbers sealed because they were not willing to stand behind them publicly."

"Now we want Block to make public the right numbers," Henske added.

As part of its counterclaims, Intuit charged Block with making inconsistent statements regarding how many tax returns it prepares annually. Block has stated repeatedly, in public Securities and Exchange Commission filings and at its Jan. 10 Investment Community Conference statement, that Block-branded retail stores were responsible for fewer than 19 million returns in each of the previous six tax years.

However, in its formal complaint filed on Jan. 13, Block asserted for the first time under oath that its stores prepared more than 26 million returns. Then, four days later, Block submitted in court yet a different number of prepared returns but then asked the court to seal the number to prevent disclosure of this latest figure.

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