The Federal Trade Commission (FTC) ruled Monday that the maker of TurboTax software deceived customers when it claimed a version of its online tax filing software was free, when most customers have to pay for it.
The FTC opinion states that Intuit’s TurboTax Free Edition, which is marketed as a stripped-down version of its paid software intended for customers with simple returns, is not as free as the company claims.
“Defendant’s claims of free filing are false for the approximately two-thirds of U.S. taxpayers, who do not meet Intuit’s simple tax return qualifications and are therefore ineligible to file for free with TurboTax,” the opinion said.
The FTC said customers who run small businesses, work as independent contractors, or exceed a certain income threshold cannot use the company’s free service, a distinction not clearly stated in the ads.
It alleges that Intuit ran a “extensive, persistent and deliberate” deceptive marketing campaign designed to lure customers with promises of free tax returns and then push them into paid services.
The opinion orders the company to remove misleading claims from its advertising materials and better disclose the true costs of its tax preparation services.
FTC Director of Consumer Protection Samuel Levin called the opinion a “huge win for consumers.”
“As the Commission has long recognized, ‘free’ is a powerful lure, one that Intuit has deployed in dozens of ads,” Levin said. “Its attempts to qualify its ‘free’ claim were ineffective and often unclear.”
“The order also sends a message across the industry — ‘free’ means free — not ‘free for a few’ or ‘free for some,'” he continued. “Businesses can expect enforcement action from the FTC if they exploit the power of ‘free’ In the dishonest way Intuit did.”
Intuit denounced the FTC’s opinion, accusing the agency of bias.
“This decision is the result of a biased and broken system in which the commission serves as defendant, judge, jury, and then appellate judge, all on the same case,” commission spokesman Derek Plummer said in a statement to The Hill.
“Intuit has appealed this deeply flawed decision, and we believe that when the matter ultimately returns to a neutral body, Intuit will prevail,” he said.
The FTC’s order comes as the IRS gets closer to launching its long-awaited free tax filing service. More than a dozen states will allow some taxpayers to use a first-of-its-kind tax preparation and filing service developed by the IRS for the 2024 tax season.
Treasury Secretary Janet Yellen He bragged about the “impressive” demo. From the free IRS service on Friday.
– Updated at 6 p.m
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