The Federal Trade Commission (FTC) has ruled that TurboTax maker Intuit Inc. cannot advertise its services as “free” unless they are genuinely free for all customers or if eligibility is clearly disclosed.
Driving the news: The ruling came after the FTC found that Intuit engaged in deceptive practices by running ads claiming consumers could file their taxes for free using TurboTax, even though many did not qualify for such offerings.
- The FTC’s order prohibits Intuit from marketing its products or services as free unless there is no cost for everyone. It also requires Intuit to disclose the percentage of eligible consumers and note if a majority of taxpayers do not qualify.
- The order further mandates that terms and conditions to obtain a free service must be clearly disclosed, especially in cases where there are limited ad spaces.
- Intuit has appealed the FTC’s decision, stating that it believes the ruling is flawed and biased. The company hopes to prevail when the matter returns to a neutral body.
The backstory: This decision upholds an earlier ruling by the FTC’s administrative law judge, who found Intuit to be in violation of federal law by engaging in deceptive advertising practices.
- While there is no financial penalty associated with this order, Intuit has previously faced charges and agreed to pay $141 million in restitution in a settlement signed with the attorneys general of all 50 states in 2022.
- The settlement was meant to compensate low-income taxpayers who were eligible for free tax services but ended up paying TurboTax due to misleading marketing tactics.