FTC bans TurboTax from advertising ‘free’ services, calls them deceptive

FTC bans TurboTax from advertising ‘free’ services, calls them deceptive

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Turbo Tax goes live on February 22, 2018 in San Francisco, California.


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CNN

Federal Trade Commission The court ruled in a final order and opinion Monday that TurboTax, the popular tax filing software, engaged in deceptive advertising and prohibited the company from advertising its services for free unless they were free to all customers.

The agency said that by showing ads for “free” tax services for which many customers did not qualify, the tax filing software violated the Federal Trade Commission Act and deceived consumers.

The Federal Trade Commission filed its first lawsuit against Intuit, owner of TurboTax. Because of its deceptive advertising in 2022. The FTC staff claimed that most tax filers cannot use the company’s “free” services — “such as those who obtain a 1099 form for work in the gig economy, or those who earn farm income.” TurboTax advertises its products as free of charge to these customers, According to the Federal Trade Commission.

Federal Trade Commission Administrative Law Judge Dr. Michael Chappell’s initial decision in September, which the committee upheld on Monday. Intuit has appealed to the Federal Trade Commission (FTC) as part of the process.

Intuit said in a statement on Monday that it was appealing “this deeply flawed decision.” To the Federal Circuit Court outside the Federal Trade Commission (FTC).

“No one should be at all surprised that the FTC commissioners — the FTC’s staff — ruled in favor of the FTC as they have done in every appeal over the past two decades. This decision is the result of a biased and broken system in which it operates,” an Intuit spokesperson said. The committee as defendant, judge, jury, and then appellate judge, all in the same case.”

The FTC has ordered that Intuit cannot advertise or market any goods or services for free unless they are free to all customers.

The commission said it could also clearly disclose what percentage of customers actually qualified for the free service, somewhere close to the advertised “free” claim. The FTC added that if the service isn’t already free to the majority of consumers, TurboTax can state that as well.

The FTC ordered Intuit to “clearly and conspicuously disclose all terms, conditions, and obligations required to obtain the ‘free’ good or service.”

“The order also prohibits Intuit from misrepresenting any material facts about its products or services such as price, refund policies, consumers’ ability to claim a tax credit or deduction, or to accurately file their taxes online without using the paid TurboTax service,” the statement said. From the Federal Trade Commission said.

Last May, nearly 4.4 million people were scheduled to receive checks from TurboTax, following a 50-state settlement with parent company Intuit for allegedly steering millions of low-income Americans away from free tax filing services.

The investigation was opened later A 2019 ProPublica report accused the company of steering qualified customers away from federally subsidized tax filing products by making them difficult to find in web searches — instead steering them toward the paid version of the company’s filing services.

Most customers will get around $30, with some customers who have used TurboTax for three consecutive years getting up to $85. A website has also been created for more information.

“TurboTax’s predatory and misleading marketing deceived millions of low-income Americans who were trying to fulfill their legal duties to file their taxes,” New York Attorney General Letitia James said in a May 4, 2023, press release. “Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who never had to pay to file their taxes.”

CNN’s Jordan Valinsky contributed to this report.

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