DOW JONES NEWSWIRES
Jackson Hewitt Tax Service Inc. (JTX), the No. 2 tax preparer in
the U.S., filed a federal lawsuit against H&R Block Inc. (HRB),
alleging its much-larger rival maligned it with false
advertising.
The move comes as competition heats up ahead of the April tax
deadline in the U.S. for the smaller number of taxpayers using
preparation services. The relative ease of online-preparation
services and the weak economy have prompted many consumers to do
their taxes themselves.
Jackson Hewitt and H&R Block have both reported lower
revenue in recent quarters, though each has seen losses narrow on
lower costs. Tax-preparation companies typically post losses in the
summer and autumn quarters due to the cyclical nature of the tax
season.
In a suit filed with the U.S. District Court for the Southern
District of New York, Jackson Hewitt said H&R Block has
"resorted to a campaign of misinformation." It said the rival's
marketing "incorporates several literally false, misleading and
highly disparaging advertising claims," including the claim that
H&R Block's second-look review service "has found errors in 2
out of 3 Jackson Hewitt returns."
The plaintiff is seeking an injunction barring the ads, as well
as damages and attorney fees.
An H&R Block spokesman couldn't immediately be reached for
comment.
Jackson Hewitt shares recently traded at $1.58, up 1 cent, while
H&R Block was down 0.6% at $12.43.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com