Intuit’s Deceptive Advertising Tactics: FTC Takes Action

Federal Trade Commission Issues Opinion and Final Order

Date: January 22, 2024

Summary:

Intuit, the prominent provider of TurboTax tax filing software, has faced severe consequences for engaging in deceptive advertising practices. The Federal Trade Commission (FTC) issued an Opinion and Final Order, finding Intuit in violation of the FTC Act. The commission determined that Intuit misled consumers by running advertisements for “free” tax products and services that were not genuinely accessible to a substantial portion of consumers.

Key Points:

1. Deceptive Advertising Practices:

– Intuit’s advertisements for “free” tax products and services were found to be deceptive, as they did not accurately represent the true cost of using their software.
– The FTC deemed these advertisements to be in violation of Section 5 of the FTC Act, which prohibits deceptive advertising.

2. FTC’s Opinion and Final Order:

– The FTC’s Opinion and Final Order upholds the opinion of Chief Administrative Law Judge D. Michael Chappell, who concluded that Intuit’s advertising was deceptive.
– The order mandates Intuit to cease making deceptive claims and adhere to specific requirements regarding transparency and disclosure.

3. Prohibitions and Requirements:

– Intuit is prohibited from advertising any product or service as free unless it is genuinely free for all consumers.
– If a product or service is not free for a majority of consumers, Intuit must clearly disclose the percentage of taxpayers or consumers eligible for the free offer.
– Intuit must disclose all terms, conditions, and obligations necessary to obtain the “free” product or service.
– Intuit is prohibited from misrepresenting material facts about its products or services, including price, refund policies, and consumers’ abilities to claim tax credits, deductions, or file taxes accurately without using TurboTax’s paid service.

Intuit’s Response:

Intuit has expressed its disagreement with the FTC’s decision, appealing the ruling and claiming it is “deeply flawed.” The company expects to prevail when the matter is decided by a neutral body. Intuit’s spokesperson criticized the FTC’s system, deeming it biased and broken, as the commission acts as accuser, judge, jury, and appellate judge in the same case.

Impact on Consumers and Honest Marketers:

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, hailed the decision as a major victory for consumers and honest marketers. Levine emphasized the importance of protecting consumers from deceptive advertising practices and ensuring fair competition in the marketplace.

Conclusion:

The FTC’s Opinion and Final Order serves as a stark reminder to businesses that engaging in deceptive advertising practices will not be tolerated. Intuit’s case highlights the need for transparency and honesty in marketing, particularly when offering “free” products or services. The decision upholds consumer rights and promotes fair competition in the tax filing software industry.