The FTC has ruled against Intuit in an administrative complaint via a September 8, 2023 Administrative Law Judge ( ALJ ) order. Intuit plans to appeal the decision, which they believe is unfair and biased. They argue that the FTC has a history of ruling in its own favor in consumer protection cases, and that the FTC’s process in this case was flawed. Intuit also says that they have already made changes to their advertising practices to comply with the FTC’s ruling, and that they expect no significant impact to their business. Intuit is committed to free tax preparation, and they are proud that over the last 10 years more than 124 million taxpayers have filed their taxes with Intuit completely free of charge. They believe that the FTC’s decision is improper and tramples on the foundations of an independent American judicial system
The FTC case, in summary:
The FTC is suing Intuit for misleading consumers about its “free” tax filing service. The FTC alleges that Intuit’s ads made it seem like anyone could file their taxes for free with TurboTax, when in reality, many people were excluded from the free service.
The ALJ order, in summary:
The FTC’s initial complaint, issued on March 28, 2022, alleges that Intuit deceptively marketed TurboTax by claiming through various advertising channels that consumers could file their taxes for free using TurboTax. However, the service was only free for a subset of consumers, based on the tax filing forms they used. Many consumers, after being drawn to the TurboTax website with the promise of free filing, found out during their tax preparation that they couldn’t file for free and were prompted to upgrade to a paid TurboTax product to complete their tax filing. This deceptive tactic was termed a “door-opener” in the complaint. In response, Intuit denied the allegations, asserting that their TurboTax Free Edition was indeed free for millions of taxpayers and that their advertising clearly conveyed the limitations of the free offer. Intuit also raised several affirmative defenses, including that they had already ceased the challenged advertising and had entered into a settlement agreement with attorneys general from all 50 states and the District of Columbia. After reviewing the entire record, the evidence showed that Intuit had engaged in deceptive advertising in violation of Section 5 of the FTC Act, leading to the issuance of an appropriate remedial order.
Intuit previously settled a lawsuit in May 2022 brought by state attorney generals regarding consumers who paid Intuit to file their federal tax returns through TurboTax for tax years 2016, 2017, and 2018 but were eligible to file for free through the IRS Free File Program. In this settlement- $141 million – eligible consumers received about $30.