The Federal Trade Commission sued on Monday, saying that it was deceptive to advertise a free tax filing. The FTC said that the deceptive tactics pushed customers toward paid products even if they were eligible for the free file program.
The FTC asked a judge to issue a temporary restraining order and preliminary injunction to stop the deceptive claim that consumers can file their taxes for free using TurboTax.
The FTC said that Intuit makes misleading claims about its product in paid advertisements and on its website. The FTC's allegations were inaccurate, according to the response from Intuit.
One of the commercials cited by the FTC is a one with an auctioneer repeatedly saying "free", and another is an exercise class where a court stenographer recorded a legal proceeding in which "free" was the only word used.
The FTC said that the word "free" is repeated over 40 times in several ads. The FTC asked the court to immediately halt the advertising of TurboTax.
The FTC said that the offer is limited to consumers with simple tax returns.
AdvertisementOver the past few years, the FTC said, Intuit has changed its definition of a simple tax return. A return that can be filed on a Form 1040 with limited attached schedules to cover a few different tax situations, including student loan interest paid, is the latest definition.
The FTC said that the free version of TurboTax excludes people from filing certain types of forms. The FTC said that consumers who aren't eligible include those who receive independent contractor or small business income, such as consumers working in the gig economy.
The FTC's arguments are not credible according to Kerry McLean. Our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep.
Over the last eight years, TurboTax has helped nearly 100 million Americans file taxes for free, and its latest advertising campaign drove growth from 11 million free filers in the year before to 17 million free filers in the year after.
The FTC lawsuit said that taxpayers who go to the website to get free tax filing are met with a number of hard stops that urge them to upgrade to the more expensive versions. There is an additional fee for state tax returns. The complaint also said that.
Intuit's deceptive door-opener ads described above bring consumers to the TurboTax website representing that consumers can file their taxes for free using TurboTax, but once there, many consumers encounter screens that inform them that they cannot complete and file their taxes for free. In the case of the Hard Stop screens, this confrontation comes after consumers have already created a TurboTax account and expended substantial time inputting sensitive personal and financial information into Intuit's user interface.
To upgrade to a paid version is done based on certain types of income, such as income from a farm, farm rental or farm equipment, selling a home, or a prior year state tax refund. After they encounter a hard stop screen, customers are required to pay for the upgraded version of TurboTax, either by providing payment information or agreeing to an additional charge to pay using their tax refunds after their returns have been prepared and are ready to file.
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