FTC Cracks Down on TurboTax's ‘Deceptive Advertising’

FTC Cracks Down on TurboTax's ‘Deceptive Advertising’

Published: January 23, 2024

The U.S. Federal Trade Commission (FTC) has issued its official opinion against Intuit Inc., the maker of popular tax filing software TurboTax, for engaging in “deceptive advertising” regarding its "free" filing services.

Many consumers who attempted to use TurboTax’s "free" filing services have found themselves ineligible due to various hidden restrictions, leading to unexpected fees and frustration.

The FTC voted unanimously (3-0) to uphold an earlier ruling by an administrative law judge who found that Intuit misled consumers about the eligibility criteria for their “free” filing options.

The FTC order prohibits Intuit from:

  • Marketing any product or service as "free" unless it is truly free for all consumers
  • Making misleading claims about the price, refund policies or ease of use of its products
  • Misrepresenting consumers' ability to claim tax credits or deductions or file their taxes online accurately without using its paid services

Instead, Intuit ads will be required to disclose:

  • The percentage of taxpayers eligible for the free filing service
  • All terms, conditions and obligations required to qualify for the free service
  • A statement indicating If a majority of consumers are not eligible for the free service

Netizens are reacting positively to the news on social media, with EliteRockerz even reminiscing the time when 80,000 fans booed a TurboTax ad during Wrestlemania 39.

The Free File program, a public-private partnership between the IRS and tax preparation companies that began in 2003, offers seemingly free online tax filing for individuals earning less than $73,000 annually.

TurboTax is a founding member of the program.

Despite this initiative, utilization remains low, with official IRS data indicating less than 3% of taxpayers using it in 2020. This discrepancy has garnered attention, prompting an audit by the Treasury Inspector General for Tax Administration (TIGTA).

The audit found that at least 14 million Americans who could have filed for free through Free File ended up paying for tax preparation services.

In a 2022 letter to Intuit, Sen. Elizabeth Warren and Reps. Katie Porter and Brad Sherman accused the company of getting away with “Free File scams thanks to extensive lobbying and adroit influence-peddling.”

FTC’s final order represents a big win for consumer protection, as it addresses a long-standing complaint about TurboTax's misleading advertising practices.

“I congratulate our team in the Division of Marketing Practices for securing this hard-fought victory for American consumers," Samuel Levine, director of FTC's Bureau of Consumer Protection, said in an official statement.

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