June 30, 2022

The FTC is suing Intuit to try to stop 'deceptive' ads claiming TurboTax is free

The FTC is suing Intuit to try to stop ‘deceptive’ ads claiming TurboTax is free

Zoom / TurboTax products are on display at Costco on January 28, 2016, in Foster City, California.

Getty Images | Kimberly White

The Federal Trade Commission sued Intuit on Monday, alleging it is deceptively advertising “free” tax filings with TurboTax. Intuit’s deceptive tactics pushed customers toward paid products — even in cases where they were eligible for Free File at no cost to people on low and middle incomes, the Federal Trade Commission said.

The Federal Trade Commission (FTC) asked a judge to issue a temporary restraining order and a preliminary injunction forcing Intuit to stop “publishing the deceptive claim that consumers can file their taxes for free using TurboTax when, in fact, in many cases, the defendant does not allow consumers to file their taxes charge for free using TurboTax”. If approved by the court, a Proposed order introduced by the FTC would force Intuit to either stop claiming that its product is free or explicitly include all restrictions in advertisements “so as to leave no reasonable possibility that the terms of the offer might be misunderstood.”

The Federal Trade Commission said Intuit makes misleading claims about TurboTax in paid advertising and on its website. “A lot of Intuit’s ads for TurboTax convey the message that consumers can file their taxes for free with TurboTax, even if they go so far as to air commercials in which nearly every word spoken is ‘free,'” the FTC said in its statement. complaint Filed in US District Court for the Northern District of California. Intuit said it will fight the lawsuit in a Response which described the FTC’s allegations as inaccurate.

Intuit commercials cited by the FTC include an ad with the auctioneer repeatedly saying “free,” “another where a stenographer in court recorded a legal proceeding in which the only word used was the word “free,” and another in which the classroom teacher chanted,” she said. FTC “Free while you lead a group exercise.”

“In many ads, the word ‘free’ was repeated more than 40 times in a 30-second ad,” the FTC said. Federal Trade Commission emergency movement Orders the Court to “immediately cease the deceptive advertising of TurboTax by defendant Intuit Inc..”

FTC: Insufficient accuracy printed disclaimer

The disclaimer neatly printed at the end of the ads informs viewers that the offer is limited to consumers with ‘minimal tax returns’ or ‘minor returns from the US’ only. “File their taxes for free with TurboTax.” The disclaimers are “disproportionately small,” appearing only for a few seconds, and “often with a font color similar to the background color, and not read by the voiceover.”

The Federal Trade Commission said Intuit has changed its definition of a “simple tax return” repeatedly over the past few years. The latter definition is “a return that may be filed on Form 1040 with limited schedules attached to cover certain distinct tax situations, including interest paid on a student loan.”

The Federal Trade Commission said the Freemium version of TurboTax excludes people who file certain types of 1099 forms, regardless of their income. The FTC said ineligible consumers include those “who receive an independent contractor or small business income, such as consumers operating in the temporary jobs economy through, for example, the provision of transportation services or grocery delivery.”

Intuit: FTC’s arguments ‘simply untrustworthy’

Intuit Executive Vice President and General Counsel Kerry MacLean said: “The FTC’s arguments are not credible. Far from guiding taxpayers away from free tax preparation offers, our free advertising campaigns have led to more Americans filing their taxes for free than Ever pivotal to raising awareness of free tax preparation.”

MacLean said TurboTax has helped nearly 100 million Americans file taxes for free over the past eight years and that its recent ad campaign led to “nearly 60 percent growth from 11 million free files in 2018 before launching the campaign to more than 17 million people.” Free in 2021.”

“Hard Stops” on the TurboTax website

The lawsuit from the Federal Trade Commission said that taxpayers who go to the TurboTax website in search of free tax filings encounter many “hard stops” urging them to upgrade to versions that cost $59 or $119 for federal tax returns. (TurboTax charges an additional fee for state tax returns.) As stated in the complaint:

Deceptive Intuit ads open the doors described above to bring consumers to the TurboTax website which is that consumers can file their taxes for free with TurboTax, but once there, many consumers are faced with screens telling them that they cannot complete and file their taxes for free. In the case of Hard Stop screens, this encounter comes after consumers have already created a TurboTax account and spent significant time entering sensitive personal and financial information into the Intuit user interface.

Customers are encouraged to “upgrade to the paid version based on certain types of income, such as income from a farm, farm rental, farm equipment, home sale, prior year state tax refunds, investments… [or] When seeking certain tax credits or deductions, the Federal Trade Commission (FTC) said. “After encountering a ‘fixed saver’ screen, customers ‘later have to pay for the updated version of TurboTax, either by providing payment information or agreeing to an additional fee for payment,'” the FTC said. using their tax refund after their returns have been prepared and ready to file.”