TurboTax can no longer advertise products as free, FTC says
Federal regulators have ruled that Intuit, the maker of tax-filing software TurboTax, must stop marketing its services as free unless they are free for everyone or exceptions are clearly disclosed.
TurboTax has claimed for years that customers could file their taxes online for free. The Federal Trade Commission said in an opinion and final order Monday that its advertising was misleading because two-thirds of taxpayers were ineligible to apply for the free product.
The commission also found that the company's attempts to publicize that not everyone was eligible for free services were “ineffective and often unobtrusive.”
Examples of taxpayers who are not eligible include those claiming mortgage and property deductions, charitable donations of more than $300, unemployment income, investment income, rental property income and certain education expenses. Gig workers who reported income as independent contractors, including many delivery drivers, were also ineligible.
Samuel Levine, director of the FTC's Bureau of Consumer Protection, described Intuit's violations as “egregious.”
Federal regulators cited misleading language in the company's “AbsoluteZero” advertising campaign. That campaign included the phrase “Free Guaranteed” and told consumers, “At least your taxes are free.”
“The order also sends a message to the entire industry – 'free' means free – not 'free for a few' or 'free for some,'” Mr. Levine said. said in a statement. “Companies can face an FTC enforcement action if they leverage the power of 'free' in the unfair way Intuit did.”
The FTC order not only prohibits TurboTax from marketing its products as free unless the products are free to everyone, but also requires TurboTax to “clearly and conspicuously” disclose the percentage of taxpayers or consumers who qualify for the free product or free service. Alternatively, TurboTax could announce that a majority of consumers are ineligible.
Intuit said in a statement that the decision was “deeply flawed” and that the company would appeal it.
“This decision is the result of a biased and broken system where the Commission acts as prosecutor, judge, jury and then as appellate judge in the same case,” the statement said.
In 2022, following a multi-state investigation led by New York Attorney General Letitia James, Intuit agreed to refund $141 million to more than four million Americans who were wrongly charged for tax services that were improperly were advertised as free. The company admitted no wrongdoing in the settlement.
Settlement checks were sent out last year The Associated Press. Those affected were predominantly low-income taxpayers who qualified for a free federal tax service program managed by the Tax Authorities.