The Federal Trade Commission (FTC) has issued a new order requiring Intuit, the maker of TurboTax, to alter its advertising practices. The order follows a comprehensive investigation into the company's marketing strategies, which suggested that its tax preparation software was freely available when, in reality, it was not free for a significant number of users.
Misleading Advertising Campaigns
According to the FTC, for many years, Intuit has been aggressively promoting TurboTax as a free service, even featuring it in high-profile events such as the Super Bowl and the 2022 NCAA Basketball Tournament. However, the FTC found that a large proportion of taxpayers, approximately two-thirds, were ineligible for the free service advertised by TurboTax. The investigation revealed that many consumers were faced with unexpected charges during the tax filing process despite the free filing claims.
As detailed in the complaint, Intuit engaged in a years-long marketing campaign centered on the promise of “free” services. These ads have run during major events, including the Super Bowl, and have also aired during this year's NCAA Basketball Tournament /4 pic.twitter.com/3JCRXsGo8l
— FTC (@FTC) March 29, 2022
Samuel Levine, the Director of the Bureau of Consumer Protection, highlighted the issue stating that consumers were bombarded with ads for free tax filing services only to end up being charged when it was time to file. The FTC's lawsuit against Intuit, initiated two years prior to the order, was pivotal in bringing these issues to light.
Future Advertising Compliance
The new order is set to amend TurboTax's future advertising by prohibiting Intuit from claiming its tax products and services are free unless they truly are free for all consumers. In cases where services are not free for the majority, Intuit is required to disclose that most consumers do not qualify for the free service. In addition, the company must transparently disclose all terms, conditions, and obligations associated with the free services it offers.
Moreover, Intuit is barred from providing false information about significant product or service features, including pricing, refund policies, and eligibility for tax credits or deductions. The FTC's action reinforces the importance of honest advertising and ensures that consumers have access to fair and accurate information.
For Americans with an adjusted gross income of $79,000 or less, the IRS' Free File Program remains an option for filing federal and state tax returns at no cost. The FTC's decision aims to ensure that Intuit's advertising aligns with other available free filing options and accurately reflects the services provided.