The commission’s final order prohibits the company behind TurboTax from advertising any service or product as free unless it is genuinely free for all consumers.
01/29/2024 2:45 P.M.
2 minute read
In a recent legal move, the Federal Trade Commission has issued an opinion and final order (PDF) against Intuit Inc., the company behind the widely used TurboTax tax filing software, according to a press release from the FTC.
The FTC alleges that Intuit engaged in deceptive advertising, violating the FTC Act by misleading consumers with “free” tax products and services for which many were ineligible. The commission’s final order comes on the heels of a unanimous 3-0 vote, upholding the Chief Administrative Law Judge’s (ALJ) decision and demanding that Intuit cease its deceptive practices.
In its decision, the FTC found that Intuit’s advertising was deceptive, violating Section 5 of the FTC Act. The Chief ALJ, D. Michael Chappell, ruled that Intuit’s defenses lacked merit. The central issue lies in the company’s promotion of “free” tax solutions that, according to the FTC, did not genuinely cater to all consumers as advertised.
As a result of the final order, Intuit is now prohibited from advertising any product or service as free unless it is genuinely free for all consumers. If not, the company must disclose, in close proximity to the “free” claim, the percentage of taxpayers or consumers who qualify for the free offering. Alternatively, if the majority of consumers do not qualify, Intuit must explicitly state this fact.
Additionally, the order mandates that Intuit must provide clear and conspicuous disclosure of all terms, conditions, and obligations required to obtain the supposedly “free” good or service. In situations where advertisements are space-constrained, such as online ads, Intuit is not required to include all terms and conditions directly in the ad. However, the company must disclose either the majority of consumers’ ineligibility for free services or the percentage that does qualify. In addition, a link must be provided in these space-constrained online ads, directing consumers to a detailed page outlining all terms and conditions.
Beyond the “free” service claims, the order also requires Intuit to refrain from misrepresenting any material facts about its products or services. This encompasses aspects like the price, refund policies, or consumers’ ability to claim tax credits or deductions, as well as filing taxes online accurately without utilizing TurboTax’s paid services.
Read the FTC’s final order here (PDF).
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