NEW YORK — US regulators have ordered TurboTax maker Intuit Inc. prohibited from advertising services as “free” unless they are free to all customers or eligibility is clearly disclosed.
In an opinion and final order issued Monday, the Federal Trade Commission 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 offers.
“The nature of the past violations is egregious,” reads the opinion from the FTC commissioners, detailing Intuit ads over the years on TV, radio and online. “Intuit blanketed the country with misleading advertising to taxpayers across multiple media channels.”
In addition to prohibiting Intuit from marketing its products or services as free unless there is actually no cost to everyone, the FTC’s order requires Intuit to disclose what percentage of consumers qualify and note whether a majority of taxpayers are not eligible.
The terms and conditions for obtaining a free good or service must also be clearly disclosed or linked if advertising space is limited, the FTC said in its order. The order also prohibits Intuit from “misrepresenting any material facts about its products or services,” including its refund policies and price points.
In a statement to The Associated Press, Intuit said Tuesday it had appealed what it called the FTC’s “deeply flawed decision.”
“This decision is the result of a biased and broken system where the Commission acts as prosecutor, judge, jury and then as appellate judge in the same case,” Intuit said. The California company later added that it believes it will prevail “when the matter ultimately reaches a neutral body.”
Monday’s opinion and final order affirm an initial decision by D. Michael Chappell, the FTC’s chief administrative officer, who ruled that Intuit violated federal law in September by engaging in deceptive advertising.
There was no financial penalty in the FTC’s order, but Intuit has previously faced significant charges for marketing “free” services. In a 2022 settlement signed by the attorneys general of all fifty states, Intuit agreed to suspend TurboTax’s “free, free, free” ad campaign and refund $141 million to nearly 4.4 million taxpayers in the entire country.
Settlement checks were sent out last year. Those affected were low-income consumers who qualified for free, federally supported tax services — but who paid TurboTax to file their federal returns because of “predatory and misleading marketing,” New York Attorney General Letitia James said.