Aug 1 (Reuters) - A U.S. judge on Thursday refused to

block the U.S. Federal Trade Commission from pursuing an

enforcement action against tax industry giant H&R Block ( HRB )

for allegedly misleading consumers about the scope of its free

tax-filing services.

Chief U.S. District Judge Beth Phillips in Kansas City,

Missouri, said H&R Block ( HRB ) was not likely to win its lawsuit,

which claimed the FTC's internal enforcement proceeding violates

the U.S. Constitution because it delegates authority to an FTC

administrative judge to initially decide the agency's case.

A hearing in the FTC administrative case is set for late

October.

H&R Block ( HRB ) in a statement said it continued to believe the

participation of an administrative law judge in the pending FTC

proceedings was unlawful and would appeal the court's order.

The FTC did not immediately respond to a request for

comment.

The FTC in February accused H&R Block ( HRB ) of deceiving customers

with broad marketing for "free" online tax filing services that

really only apply to simple returns. The agency also said H&R

Block ( HRB ) had unfairly deleted consumers' tax data.

H&R Block ( HRB ) has denied the FTC's claims.

The FTC's administrative law judges preside over hearings

and take evidence, and they issue findings that can be appealed

to the full commission. The agency then hears arguments and

issues a final order. Those decisions can be appealed to a U.S.

court.

In March, H&R Block ( HRB ) sued in federal court to enjoin the FTC

proceeding, arguing that the agency's use of administrative law

violates a provision of the U.S. Constitution that gives power

to U.S. presidents to remove "inferior officers."

The lawsuit said the FTC's internal judges are improperly

insulated from that authority, and that the agency must abandon

their use.

The FTC countered that H&R Block ( HRB ) was advancing an "extreme"

legal theory that would not succeed. It said granting the

company's request for a preliminary injunction to block the

administrative case "would be contrary to the public interest by

inhibiting the FTC from protecting consumers harmed by

plaintiffs' alleged deceptive practices."

Phillips said in her decision that administrative law judges

do not have the sweeping power that H&R Block ( HRB ) suggested they do.

The judges do not issue regulations, Phillips said.

She said the FTC has the final say on administrative judge

decisions that might implicate policy matters.

The case is H&R Block ( HRB ) et al v. Himes et al, U.S. District

Court for the Western District of Missouri, No.

4:24-cv-00198-HFS.

For H&R Block ( HRB ): Hashim Mooppan of Jones Day

For FTC: Christine Coogle of the U.S. Justice Department

Read more:

H&R Block ( HRB ) sues US Federal Trade Commission over tax ads

probe

H&R Block ( HRB ) accused of deceptive marketing over ads for free

tax-filing