FTC Rules TurboTax Maker Intuit Violated US Law with Deceptive Advertising
The Federal Trade Commission (FTC) has recently ruled that Intuit, the maker of TurboTax, has violated US law through deceptive advertising practices. The FTC’s decision comes after an investigation into Intuit’s claims that TurboTax is a free service, without adequately disclosing the eligibility requirements for this offer. The ruling states that Intuit must cease advertising TurboTax as free unless it is truly accessible to all consumers or clearly discloses the percentage of taxpayers who qualify for the free service.
The FTC’s final order, which was supported by a unanimous vote of 3-0, upholds a previous ruling made in September 2023 by the FTC’s chief administrative law judge. Under this order, Intuit is required to provide clear and conspicuous disclosures of all terms, conditions, and obligations associated with obtaining the “free” product or service. In cases where space constraints prevent the inclusion of all necessary information, Intuit must either disclose that a majority of consumers do not qualify for the free offer or provide a link to a detailed description of the terms and conditions.
Intuit, however, has expressed its intention to challenge the FTC’s ruling in a federal court of appeals. The company has been critical of the FTC’s administrative process, which allows FTC officials to rule on complaints filed by the FTC itself. In a statement, Intuit stated that they believe they will ultimately prevail when the matter is reviewed by a neutral body.
Intuit has defended its advertising practices, emphasizing that it has assisted over 124 million Americans in filing their taxes for free. The company asserts that it has always been transparent and fair with its customers and remains committed to providing free tax preparation services. Additionally, Intuit claims to already adhere to most of the advertising practices demanded by the FTC and expects no significant impact on its business as a result of the ruling.
The FTC’s order also addressed Intuit’s complaint regarding bias in the agency process. Intuit argued that the combination of investigative and adjudicative functions within the FTC creates an unconstitutional risk of bias. However, the FTC rejected this claim, citing a Supreme Court decision from 1975 that established the permissibility of such a process. The FTC’s order maintains that the agency’s dual role does not violate due process.
Samuel Levine, the Chief of the FTC Bureau of Consumer Protection, praised the commissioners’ vote and highlighted the importance of the ruling. Levine stated that Intuit must now adhere to a clear standard, ensuring that their ads are not deceptive and accurately represent the number of individuals eligible for their “free” products. He further emphasized that businesses should understand that “free” means free for all, not just a select few. The FTC intends to take enforcement action against any company that misuses the concept of “free” in a dishonest manner, similar to Intuit’s practices.
Levine also criticized the clarity of Intuit’s disclaimers regarding the eligibility for their free tax-filing product. He argued that the “simple returns only” disclosure was insufficiently clear and conspicuous, as it did not effectively counteract the strong impression created by Intuit’s “free” advertisements. The FTC’s review found that the majority of tax filers were not eligible for the free version of TurboTax and were instead directed towards more expensive deluxe and premium products.
In conclusion, the FTC’s ruling against Intuit highlights the importance of transparent and honest advertising practices. It serves as a reminder to businesses that they must clearly disclose any limitations or requirements associated with their “free” offers. The outcome of Intuit’s appeal in a federal court of appeals will determine the final resolution of this case. However, regardless of the appeal’s outcome, this ruling sends a clear message to companies across industries that misleading advertising practices will not be tolerated by the FTC.