FTC forbids Intuit from advertising services as ‘free’

The US Federal Trade Commission (FTC) ordered Intuit, a TurboTax software maker, to stop advertising its services as free if they are not free for most of its users. Alternatively, the company will need to reveal the percentage of consumers who qualify for its free services.

In addition, Intuit will also need to clearly disclose the “terms, conditions and obligations” required for consumers to use their “free” goods or services. The FTC voted 3-0 to issue this order against Intuit. This order was released subsequent to the original ruling against Intuit in September last year.

“The Commission alleges that the company’s ubiquitous advertisements touting their supposedly “free” products—some of which have consisted almost entirely of the word “free” spoken repeatedly—mislead consumers into believing that they can file their taxes for free with TurboTax,” said the case summary on the FTC website. It added that almost two-thirds of tax filers were not able to use TurboTax’s free version in 2020.

Intuit responded with its decision to appeal after the FTC’s order on Monday. “Intuit is immediately appealing this decision, and we believe that when the matter ultimately returns to a neutral body we will prevail,” said the statement issued by Intuit. “There is no monetary penalty in the FTC’s order, and Intuit expects no significant impact to its business,” it added.

TurboTax is one of the largest software products to aid US citizens in filing tax returns.

TurboTax: Repeat offender?

About two years ago, Intuit had decided to pay $141 million as compensation to settle claims by 50 US states and Washington DC that it deceived several millions of customers into buying online products from TurboTax. This settlement also called for Intuit to stop using deceptive slogans like “TurboTax Free is free. Free Free Free Free.”

This settlement also addressed claims that Intuit pushed close to 4.4 million users, many from low-income segments of society, to purchase tax filing products despite being eligible for free electronic filing through the Internal Revenue Service (IRS).

FTC had alleged that TurboTax is free only for some users while the majority had to purchase it. “For many others, Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free; they will need to upgrade to a paid TurboTax service to complete and file their taxes,” said the lawsuit.  An investigation by ProPublica revealed in 2019 that Intuit lobbies extensively to make sure tax filing continues to remain complicated in the US, thus ensuring the continued relevance of TurboTax software.