FTC rules: TurboTax misleadingly advertises 'free' despite required payments

U.S. regulators have ruled that Intuit Inc., the maker of TurboTax, cannot advertise its services as "free" unless they are truly free for all customers or if eligibility is clearly disclosed. The Federal Trade Commission (FTC) found that Intuit engaged in deceptive practices by running ads claiming that consumers could file their taxes for free using TurboTax, even though many people did not qualify for such free offerings.

The FTC's opinion and final order, issued on Monday, stated that Intuit had engaged in egregious violations by running deceptive ads across TV, radio, and online platforms. As a result, the order prohibits Intuit from marketing its products or services as free unless there is no cost for everyone. Additionally, Intuit must disclose the percentage of consumers who are eligible for free services and note if a majority of taxpayers do not qualify.

The order also requires Intuit to clearly disclose the terms and conditions to obtain a free service, particularly if ad space is limited. Furthermore, Intuit is barred from misrepresenting any material facts about its products or services, including refund policies and price points.

Intuit has appealed the FTC's decision, calling it "deeply flawed" and criticizing the process in which the FTC serves as accuser, judge, jury, and appellate judge all in the same case. The company believes that it will ultimately prevail when the matter is reviewed by a neutral body.

This is not the first time that Intuit has faced scrutiny over its marketing of "free" services. In 2022, the company agreed to suspend its "free, free, free" ad campaign and pay $141 million in restitution to nearly 4.4 million taxpayers nationwide in a settlement with the attorneys general of all 50 states. The settlement was a result of Intuit's deceptive marketing practices that led low-income consumers eligible for free tax services to pay TurboTax instead.

While there was no financial penalty in the FTC's order, the ruling highlights the need for companies to accurately represent the cost and eligibility of their "free" services. The order aims to protect consumers from deceptive advertising practices and ensure transparency in the marketing of financial products and services.


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