The Federal Trade Commission (FTC) ruled on Monday that the maker of TurboTax is deceiving customers when it claims a version its online tax filing software is free, when most customers would have to pay for it.
The FTC’s opinion states that Intuit’s TurboTax Free Edition, marketed as a stripped-down version of its paid software meant for customers with simple returns, isn’t as free as the company claims.
“Respondent’s claims of free filing are false for roughly two-thirds of U.S. taxpayers, who do not meet Intuit’s simple tax return qualifications and are therefore ineligible to file for free with TurboTax,” the opinion reads.
Customers who run small businesses, work as independent contractors or make over a certain income threshold can not use the company’s free service, a distinction which is not clearly established in advertising, the FTC said.
It claims Intuit ran a “broad, enduring, and willful” deceptive marketing campaign aimed at drawing in customers with promises of free tax filing and then pushing them to paid services.
The opinion orders the company to remove the misleading claims from its advertising materials and better disclose the true costs of its tax preparation services.
FTC consumer protection director Samuel Levine called the opinion a “major win for consumers.”
“As the Commission has long understood, ‘free’ is a powerful lure, one that Intuit deployed in scores of ads,” Levine said. “Its attempts to qualify its ‘free’ claim were ineffective and often inconspicuous.”
“The order also sends a message across industry – ‘free’ means free – not ‘free for a few’ or ‘free for some,’” he continued. “Businesses can expect an FTC enforcement action if they harness the power of ‘free’ in the dishonest way Intuit did.”
The Hill has reached out to Intuit for comment.
The FTC order comes as the IRS nears a roll-out of its long-awaited free tax-filing service. Over a dozen states will allow certain taxpayers to use a first-of-its-kind tax preparation and filing service developed by the IRS for the 2024 tax season.
Treasury Secretary Janet Yellen bragged about an “impressive” demo of the free IRS service on Friday.
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