The Federal Trade Commission has ruled in a final order that TurboTax, the popular tax filing software, engaged in deceptive advertising. The ruling bans the company from advertising its services for free unless it is free for all customers. By running ads for “free” tax services that many customers were not qualified for, the tax filing software deceived consumers, according to the FTC. Intuit, TurboTax’s owner, has appealed the decision, stating that the FTC Commissioners, who are employees of the FTC, ruled in favor of the FTC, which they claim is a biased and broken system.
In a statement issued on Monday, Intuit announced that it has appealed the “deeply flawed decision” to federal circuit court outside of the FTC. The FTC order prohibits Intuit from misrepresenting any material facts about its products or services, and Intuit cannot advertise or market any goods or services as free unless it’s free for all customers. Last May, approximately 4.4 million people were to receive checks from TurboTax, following a 50-state settlement with parent company Intuit for allegedly steering millions of low-income Americans away from free tax-filing services. The ruling also requires Intuit to clearly and conspicuously disclose all the terms, conditions, and obligations that are required in order to obtain the ‘free’ good or service. The investigation into TurboTax’s deceptive advertising practices emerged following a 2019 ProPublica report that accused the company of steering eligible clients away from federally supported tax filing products by making them difficult to find in web searches, directing them toward the paid version of the company’s filing services.
In a May 4, 2023 press release, New York Attorney General Letitia James stated that TurboTax’s predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes. The ruling is viewed as a correction to an unfair practice that ultimately disadvantaged hardworking taxpayers. The FTC’s order aims to prevent misleading advertising practices and ensure that companies like TurboTax do not misrepresent the accessibility of their free services.