The FTC sues TurboTax to stop ‘deceptive’ ads for free tax preparation software

The Federal Trade Commission (FTC) said Tuesday that Intuit’s “ubiquitous” ads claiming that TurboTax’s tax preparation software is free to use is misleading, and has asked a federal court to order Intuit to stop “distribution of the misleading claim that consumers can file their taxes for free with TurboTax.”

According to the committee, the ads “some of which consisted almost entirely of the repeatedly spoken word ‘free'” mislead people into believing they can file their taxes with TurboTax for free. “In fact, most tax applicants cannot use the company’s ‘free’ service because it is not available to millions of taxpayers, such as those who get a 1099 form for work in the gig economy, or those who earn farm income.” The FTC said that by 2020, “about two-thirds of tax applicants could not use TurboTax’s free product.”

The FTC is seeking injunctive relief that would prevent Intuit from “entering into deceptive acts or practices” in its marketing and advertising, including ads for TurboTax.

Intuit said in a statement it will “vigorously challenge” the FTC’s complaint, claiming the arguments were not credible. “Rather than diverting taxpayers away from free tax preparation offers, our free advertising campaigns have led more Americans to file their taxes for free than ever before and have been central to raising awareness of free tax preparation,” said Intuit’s executive. vice president and general counsel. Kerry McLean.

The IRS has a program that allows many Americans to file their taxes for free, as part of a partnership with the nonprofit Free File Alliance coalition. Intuit said last July that it was leaving that program, however, citing the “limitations”.

If all this sounds a bit familiar to readers, they might remember the 2019 series of reports from ProPublica, which revealed that Intuit and H&R Block had tricked people into paying to file their taxes. ProPublica found that both companies prevented free versions of their software from appearing in search engine results, making them harder for customers to find online. The IRS later amended the Free File program and removed a provision prohibiting the agency from creating its own online filing system that could compete with the software companies’ products.

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