FTC Sues Intuit Over Claim That TurboTax is Free

Perhaps not. The Federal Trade Commission (FTC) has taken issue with Intuit’s advertising of TurboTax, specifically with the way the software is marketed as “free.” In a lawsuit filed Monday, the FTC claimed TurboTax traps customers with its deceptive advertising and pushes them toward paid products, even when some of those customers would have qualified for the actual zero-cost Free File option reserved for those with low to moderate income.

“For many [users], Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free; they will need to upgrade to a paid TurboTax service to complete and file their taxes,” the complaint reads. Those who have income other than W-2 income (which includes business owners, rideshare and delivery drivers, and—ahem—freelancers, among others) are forced to pay extra for self-employment filing. The same goes for those who own a farm, received a state refund the year prior, or have recently sold a home.

According to the FTC, any fine print currently attached to TurboTax’s advertising is insufficient as it relates to preventing customer deception. End-of-commercial disclaimers often state “that the offer is limited to consumers with ‘simple tax returns’ or ‘simple US returns only.’” But the lawsuit notes that these disclaimers often blend into the background image and are only on screen for a few seconds. They’re also not voiced aloud, which is problematic for those who aren’t monitoring the screen.

Intuit has already responded by saying the FTC’s accusations are inaccurate and unfounded, and that the company will fight the lawsuit in court. Intuit’s main point of defense seems to be that TurboTax and its other products are in compliance with IRS requirements. But compliance with one government agency doesn’t preclude issues with another, and the FTC has always required that “claims in advertisements must be truthful” and not “deceptive or unfair.” For a company whose TV commercials mostly consist of the word “free” (as the FTC’s complaint points out), this may be a problem.

While the FTC and Intuit battle it out in court, the FTC has submitted a proposed order asking a judge to require that Intuit stop “disseminating the deceptive claim that consumers can file their taxes for free using TurboTax.” If approved, the temporary restraining order and preliminary injunction would force Intuit to pivot its advertising strategy, at least until the lawsuit has reached a conclusion.

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