The Federal Trade Commission (FTC) has recently taken action against Intuit, the maker of popular tax filing software TurboTax, for engaging in “deceptive advertising.” In a ruling made in September, the FTC found Intuit guilty of violating federal law by promoting free TurboTax software to taxpayers who were not eligible. Instead, these individuals were upgraded to deluxe and premium products, incurring additional costs. The Commission’s final order now prohibits Intuit from advertising “free” services unless all filers can access the free software or the company makes the eligibility requirements clear to consumers.
Consumer advocate Ed Mierzwinski from the U.S. Public Interest Research Group emphasized the importance of transparency when it comes to free services. He urged Intuit to pass on the FTC’s message to other corporations, stating that “free means free, not ‘free for a few’ or ‘free for some'”. The warning issued by the FTC intends to protect consumers from falling prey to misleading advertising and unexpected charges.
This is not the first time that Intuit has faced legal challenges regarding its TurboTax software. In May 2022, the company entered into a multistate agreement, agreeing to pay $141 million to lower-income Americans who were erroneously charged for using the “TurboTax Free Edition.” Approximately 4.4 million customers were affected by this agreement, and the settlement process began in May 2023. Intuit spokesperson Derrick Plummer expressed discontent with the FTC’s decision, claiming that the Commission’s role as accuser, judge, jury, and appellate judge undermines the neutrality of the system. Plummer announced that Intuit has lodged an appeal and is confident that they will prevail once the case reaches a neutral body.
Coinciding with the FTC’s ruling, the Internal Revenue Service (IRS) is set to launch Direct File, a pilot program that enables certain taxpayers to file their federal returns directly with the agency. This initiative aims to simplify the tax filing process and provide a free electronic filing option for eligible taxpayers. The program will be introduced gradually in select states, with wider availability anticipated by mid-March.
The FTC’s crackdown on Intuit’s deceptive advertising practices sends a clear message to corporations: misleading consumers with false claims of free services will not be tolerated. The ruling serves to protect taxpayers from unexpected costs and promotes transparency within the tax software industry. As the tax season commences, it becomes imperative for both companies and consumers to be aware of their rights and responsibilities when utilizing tax filing software. The ongoing legal dispute between Intuit and the FTC underscores the need for a fair and neutral system that ensures accountability and safeguards the interests of consumers.
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