Tag Archives: TurboTax

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.