FTC Upholds Deceptive Advertising Lawsuit against TurboTax
Federal Trade Commission Orders TurboTax to Cease Misleading Claims of Free Tax Services
Intuit, the parent company of TurboTax, engaged in deceptive advertising by claiming its tax services were free to consumers when, in reality, the vast majority of users were ineligible for the free version.
In a landmark decision, the Federal Trade Commission (FTC) has upheld its ruling against Intuit, the parent company of TurboTax, for engaging in deceptive advertising practices. The FTC found that TurboTax misled consumers by claiming its tax services were free when, in reality, the vast majority of users were ineligible for the free version. This ruling is a major victory for consumer protection and sends a clear message to companies that they cannot engage in deceptive marketing tactics.
Key Points of the FTC’s Final Order against TurboTax:
Intuit’s Response and Ongoing Legal Battle
Intuit has expressed strong dissatisfaction with the FTC’s decision, criticizing the Commission for its “biased and broken system.” The company plans to appeal the ruling, confident that it will prevail when the matter is heard by a neutral body. Intuit maintains that its advertising practices were not deceptive and that it clearly disclosed the terms of its free offer.
IRS Free File Program and Intuit’s Previous Agreement
In 2021, Intuit withdrew from the IRS Free File program, which provided free tax filing services to low-income taxpayers. This move drew criticism from consumer advocates, who accused Intuit of putting profits ahead of the needs of taxpayers. A year later, Intuit agreed to pay $141 million to settle a class-action lawsuit alleging that it had misled consumers about the availability of free tax filing services.
IRS’s Own Free Tax Filing System as a Potential Competitor
The IRS has been piloting its own free tax filing system, which could potentially rival TurboTax and provide a genuine free option for taxpayers. The IRS system is currently available to taxpayers with incomes below $73,000, and the agency is working to expand eligibility in the future.
Conclusion
The FTC’s final order against TurboTax is a significant step towards protecting consumers from deceptive marketing practices. The ruling sends a clear message to companies that they cannot mislead consumers about the availability of free services. Intuit’s decision to fight the ruling indicates a continued disagreement over the issue, and the outcome of the legal battle will determine the future of TurboTax’s marketing practices and the availability of genuine free tax filing services.