Intuit questions rival H&R Block's customer numbers

Saturday, February 4, 2006

KANSAS CITY, Mo. -- Intuit Inc. is defending advertising of its TurboTax software against rival H&R Block Inc., which claimed its smaller competitor's campaign was misleading.

Mountain View, Calif.-based Intuit filed court documents Thursday claiming H&R Block has made inconsistent statements on the number of tax returns it prepares. H&R Block says Intuit has muddled the numbers released by its Kansas City-based rival.

The conflict began Jan. 9 when Intuit began airing ads that claimed "more returns were prepared with TurboTax last year than at all the H&R Block stores combined."

H&R Block, which makes its own software called TaxCut, sued, saying its stores prepared more than 26 million returns last year compared with 21 million returns generated by TurboTax users. Intuit then amended its ads.

The papers filed by Intuit in U.S. District Court in Kansas City on Thursday claim the company was relying on data that H&R Block itself made public through annual reports, investment statements and court filings.

"H&R Block not only seeks to prevent Intuit from relying on H&R Block's publicly published numbers," the filing said, "but also seeks to prevent the public at large from relying on or even having access to H&R Block's newly claimed numbers."

Intuit claims H&R Block, the nation's largest tax preparer, submitted revised customer numbers to the court four days after its original complaint but asked the records to be sealed.

"There's just all kinds of different numbers," Intuit spokesman Rob Lanesey said Friday. "We just want to get a definitive set of numbers from Block."

H&R Block spokeswoman Linda McDougall said Intuit is confusing its competitor's number of customers with the number of returns it files. H&R Block reported 19 million clients in 2005, but because many people file more than one return (both federal and state returns, for example) the number of filings exceeds 26 million.

"Numbers just don't lie, and Intuit doesn't have the numbers to back up their claim," McDougall said. "They don't understand the difference between the number of clients served and the number of tax returns prepared."

But Lanesey said H&R Block failed to explain the number that is under court seal.

"We want to continue to advertise responsibly," he said. "We need to know what the correct numbers are."

Intuit's corporate Web site says about 12.5 million copies of TurboTax were sold last year.

Shares of H&R Block closed up 6 cents Friday to $23.89 on the New York Stock Exchange, where they have traded in a 52-week range of $23.01 to $30. Intuit shares closed down $1.13 at $51.10 on the Nasdaq Stock Market, where they have traded in a 52-week range of $37.24 to $55.94.

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