The Federal Trade Commission (FTC) is banning Intuit from advertising its TurboTax product as free when most customers were in fact ineligible.
In a final order issued Monday, the FTC upheld a September ruling that the popular tax filing software engaged in deceptive advertising and prohibited Intuit from advertising its services as free unless it’s free for all customers, or the company “clearly and conspicuously” discloses eligibility.
By running ads for “free” tax services that many tax filers were not qualified for, TurboTax violated the FTC Act, the agency said.
“The character of the past violations is egregious. For at least six years, Intuit blanketed the country with deceptive ads to taxpayers across multiple media channels,” the commission says in its recent opinion.
“Intuit continued running the ads, knowing that they led consumers to believe that they could file their returns for free, even though approximately two-thirds of taxpayers are not eligible,” the agency added.
Additionally, the FTC’s order requires Intuit to disclose what percentage of consumers are eligible and note if a majority of taxpayers do not qualify.
TurboTax website now indicates that approximately 37 percent of tax filers qualify for its free basic tier of tax filing assistance.
Terms and conditions to obtain a free good or service must also be clearly disclosed or linked to if ad space is limited, the FTC said in its order. The order also bars Intuit from “misrepresenting any material facts about its products or services,” including refund policies and price points.
“The order also sends a message across industry—‘free’ means free—not ‘free for a few’ or ‘free for some,’” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.
The California-based company said in a statement that it had appealed what it called the FTC’s “deeply flawed decision,” the Associated Press reported.
“This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case,” Intuit stated.
“We believe that when the matter ultimately returns to a neutral body we will prevail,” it said, adding that the FTC order contains no monetary penalty and will not significantly affect its business.
Intuit in May 2022 agreed to pay $141 million in restitution to settle claims by all 50 U.S. states and the District of Colombia that it tricked millions of customers into buying online TurboTax products that the company deceptively advertised as “free.”
The settlement resolved claims that Intuit steered at least 4.4 million customers, many with low incomes, into buying its tax preparation products despite the ineligibility of those customers for free electronic filing through the Internal Revenue Service.
The settlement with the states called for Intuit to suspend ads containing slogans such as “TurboTax Free is free. Free free free free.” Under terms of the settlement with states, Intuit did not admit wrongdoing.
