FTC Calls TurboTax ‘Free’ Software Deceptive in Blow to Intuit

By Michael Grothaus, Fast Company (TNS)

Just before the 2024 tax filing season kicks off in earnest, the Federal Trade Commission (FTC) has issued a final order ruling that Intuit’s popular TurboTax software can no longer be advertised as being “free,” which the regulatory body yesterday said was “deceptive advertising.”

The FTC said Intuit’s advertising was deceptive because the software wasn’t free for all users, thus Intuit “deceived consumers when it ran ads for ‘free’ tax products and services for which many consumers were ineligible.”

While Intuit will not receive a fine for its deceptive advertising, the company will need to stop advertising TurboTax as being “free.” However, the FTC did place some qualifiers on the ban. The commission said Intuit may still advertise TurboTax as being free if the company “discloses clearly and conspicuously and in close proximity to the ‘free’ claim the percentage of taxpayers or consumers who qualify for the free product or service.” Or, the FTC says, Intuit could disclose that a majority of consumers will not qualify for the free version of the software.

TurboTax’s description on its website now says that roughly 37% of taxpayers will qualify for its free version.

The FTC’s ruling was an appeal case of an earlier FTC ruling that found Intuit “engaged in deceptive advertising in violation of Section 5 of the FTC Act” by advertising its TurboTax software as free.

Intuit told Fast Company that it has already appealed the latest FTC ruling.

“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,” an Intuit spokesperson said in a statement. “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 has appealed this deeply flawed decision, and we believe that when the matter ultimately returns to a neutral body Intuit will prevail.”

Intuit is also currently involved in another court case over the marketing of tax software, but this time Intuit is the one making charges of misleading marketing. Earlier this month, it filed a lawsuit against competitor H&R Block alleging that “H&R Block is making false and misleading price comparisons between its products and Intuit’s TurboTax products.”

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