(Tiffany Hagler-Geard/Bloomberg via Getty Images)
The Federal Trade Commission is cracking down on TurboTax for marketing itself as free to consumers.
On Monday, the federal regulator upheld last September’s ruling from an FTC judge that found TurboTax’s parent Intuit engaged in deceptive advertising by claiming its tax services were free to consumers. In reality, the vast majority of users were ineligible to receive the free version of TurboTax, according to FTC investigators.
“Instead, they were upgraded into costly deluxe and premium products. As the Commission has long understood, ‘free’ is a powerful lure, one that Intuit deployed in scores of ads,” FTC Director Samuel Levine added.
Intuit appealed the September ruling. But on Monday, the FTC voted 3-0 to issue a final order to restrict the company from engaging in deceptive marketing practices, although no monetary penalty was imposed.
Under the FTC’s order, TurboTax can still market itself as free — but the service has to truly be free for all. If not, then TurboTax must clearly state the percentage of consumers that qualify for the free offer.
“The order also requires that Intuit disclose clearly and conspicuously all the terms, conditions, and obligations that are required in order to obtain the ‘free’ good or service,” the FTC added.
However, Intuit said it still plans on fighting the FTC’s decision. “Absolutely no one should be surprised that FTC Commissioners —employees of the FTC— ruled in favor of the FTC as they have done in every appeal for the last two decades. This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case,” Intuit said in a statement.
In addition, the company plans on bringing the matter before a US Federal Appeals Court. “??Intuit has appealed this deeply flawed decision, and we believe that when the matter ultimately returns to a neutral body Intuit will prevail,” the tax provider added.
Still, much of the controversy has been rendered moot. In 2021, Intuit left the IRS Free File program. A year later, the company also agreed to pay $141 million for allegedly pushing US consumers to pay for tax services that should have been free. In the meantime, the IRS has been piloting its own free tax filing system, which could one day rival TurboTax.