Tag Archives: Intuit

FTC Rules TurboTax Maker Intuit Deceived Users With Offers of “Free” Tax Products

A Federal Trade Commission judge on Friday issued an initial ruling against Intuit, the maker of the popular tax filing software against Intuit, the maker of the popular tax filing software TurboTax, saying the company deceived consumers with ads for so-called “free” tax products. CNBC reported.

According to CNBC, Intuit violated Section 5 of the FTC Act by promoting “free” tax products and services for which many were ineligible, according to Chief Administrative Law Judge D. Michael Chappell. The full commission will review the judgement before delivering a final decision.

Intuit will appeal the ruling, said Rick Heineman, a spokesperson for the company.

The Verge reported the FTC’s ruling includes pages of commercials and online ads that advertised its “Free Edition” software. While the name implies that the service is, well, free, people wound up having to pay to use it – sparking a lawsuit from the FTC and a $141 million payout to affected users.

Meanwhile, Intuit’s actually no-cost Free File version, which it launched in partnership with with the IRS, remained exceedingly difficult to find. In 2021, Intuit exited the program after the IRS stopped letting companies hide their free filing services from search engines.

The FTC posted a release titled: “Administrative Law Judge Issues Initial Decision in FTC’s Case Against Intuit Inc”. From the release (which was issued on September 8):

In an initial decision announced today, the Federal Trade Commission’s Chief Administrative Law Judge (ALJ), D. Michael Chappell, ruled that Intuit Inc. (Intuit), the maker of the popular TurboTax tax filing software, “engaged in deceptive advertising in violation of Section 5 of the FTC Act” and deceived customers were ineligible.

In ruling in favor of complaint counsel – FTC staff in the Bureau of Consumer Protection – the ALJ also found that there is a “cognizant danger of a recurring violation” by Intuit, and issued an order requiring the company to cease-and-desist from engaging in the deceptive practices alleged in the complaint.

Under the terms of ALJ’s which can be appealed to the full Commission, Intuit is “prohibited from engaging in any deceptive practices in the future.” It is also barred from representing that any good or service is free, unless: 1) it is free for all consumers; 2) it clearly and conspicuously discloses any terms that would limit the offer and might be misunderstood by consumers; and 3) the good or service is not free “to a majority of U.S. taxpayers,” this also must be disclosed in a clear and conspicuous manner…

ArsTechnica reported that the FTC commissioners will likely rule against Intuit, which issued a statement indicating that it will take the matter to federal court. The order would be in effect for 20 years if it survives appeal.

According to ArsTechnica, the response from Intuit noted that the administrative law judge is “an employee of the FTC” and “ruled in favor of the FTC in the agency’s own lawsuit.” The FTC filed an administrative complaint against Intuit in March of 2022.

“Intuit will appeal this groundless and seemingly predetermined decision by the FTC to rule in its own favor and is confident that when the matter ultimately returns to a neutral body Intuit will prevail, as it has previously in this matter,” the company said.

In my opinion, I think Intuit probably could have avoided this problem if it had been honest in their commercials. The company should not have made seem as though consumers would be able to easily access the free version of their product.

Intuit To Pay $141M Settlement Over “Free” Turbo Tax Ads

The New York Attorney General, Letitia James, announced a record multistate agreement with the owner of TurboTax, Intuit Inc. (Intuit), for deceiving millions of low-income Americans into paying for tax services that should have been free.

The press release continues: As a result of Attorney General James’ agreement, Intuit will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged. In addition, Intuit must suspend TurboTax’s “free free free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying.

All 50 states and the District of Columbia have signed on to the agreement. New York will receive more than $5.4 million for the 176,000 New Yorkers who were tricked into paying to file their federal tax return.

According to New York Attorney General Letitia James, “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to. For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal. New Yorkers can count on my office to protect their wallets from white-collar scammers”.

According to ArsTechnica, Intuit “used confusingly similar names for both its IRS Free File product and its commercial “freemium product”, ran search ads “to direct consumers who were looking IRS Free File service to the TurboTax ‘freemium’ product instead,” and “purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season”, the settlement announcement said.

The Associated Press reported that until last year, Intuit offered two free versions of TurboTax. One was through its participation in the Internal Revenue Service’s Free File Program, geared toward taxpayers earning roughly $34,000 and members of the military. Intuit withdrew from the program in July 2021, saying in a blog post that the company could provide more benefits without the program’s limitations.

Considering all of this, it appears that Intuit was hoping to provide more “benefits” to the company itself. They got greedy, and appear to have intentionally hidden the IRS Free File away from people – who were tricked into believing Intuit’s version was also free. And now, Intuit is paying for it.

The press release from the New York Attorney General’s Office states: Under the agreement, Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax.

Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will receive notices and a check by mail.

GNC-2010-01-25 #546 Live from Jacksonville

My time here in Florida is rapidly coming to a close and I will be heading back to Honolulu. I am suffering bandwidth withdrawals as the hotel connectivity is simply horrid. Someday Hilton will figure out how to keep their customers happy. But the Homewood Suites here in Jacksonville need to work on their bandwidth. Should be an exciting day on Wednesday we will see if all the fuss is worth it.

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