Getty Images | Kimberly White The Federal Trade Commission sued Intuit on Monday, claiming it was advertising misleading “free” tax returns with TurboTax. Intuit’s misleading tactics pushed customers to pay for products — even when they were eligible for the free Low- and Medium-Income Free Archive, the FTC said. The FTC asked a judge to issue a temporary restraining order and a preliminary injunction forcing Intuit to stop “spreading the misleading claim that consumers can file their taxes for free using TurboTax when in fact, in many cases, the defendant does not allow “If approved by the court, a proposed order from the FTC would force Intuit to either stop claiming that its product is free or to explicitly include all restrictions on ads “so that there is no reasonable possibility of misunderstanding the terms of the offer.” The FTC has said that Intuit is making misleading claims about TurboTax in paid ads and on its website. “Much of Intuit’s TurboTax ad conveys the message that consumers can file their taxes for free using TurboTax, even going so far as to air ads where almost every word is” free “” , the FTC said in its complaint. in the U.S. District Court for the Northern District of California. Intuit said it would fight the lawsuit in a response that called the FTC’s allegations inaccurate. Intuit ads cited by the FTC include one with an auctioneer repeatedly saying “free,” another in which a court orthographer recorded a lawsuit in which “free” was the only word used, and another in which “An exercise instructor sings ‘free’ while driving a group workout,” the FTC said. “In many ads, the word ‘free’ is repeated more than 40 times in a 30-second ad,” the FTC said. The FTC’s urgent motion called on the court to “immediately stop misleading TurboTax advertising by Defendant Intuit Inc.”

FTC: Disclaimer details are inadequate

The disclaimer at the end of the ad informs viewers “that the offer is limited to consumers with ‘simple tax returns’ or ‘simple US tax returns only.’ that consumers can file their taxes for free using TurboTax. Advertising
Intuit has repeatedly changed its definition of “simple tax return” in recent years, the FTC said. The most recent definition is “a statement that can be submitted on a Form 1040 with limited attachments to cover some distinct tax returns, including student loan interest paid”. The FTC said the freemium version of TurboTax excludes individuals who submit certain types of 1099 forms, regardless of their income. Ineligible consumers include those who “receive income from independent contractors or small businesses, such as consumers who work in the concert economy by providing, for example, sharing services or grocery deliveries,” the FTC said.

Intuit: FTC’s Arguments ‘Just Not Reliable’

Intuit Executive Vice President and Chief Executive Officer Kerry McLean said: “The FTC’s arguments are simply not credible. “A key element in raising awareness about free tax preparation.” McLean said TurboTax has helped nearly 100 million Americans file taxes for free over the past eight years, and that its latest ad campaign led to a “nearly 60% increase from 11 million free files in 2018 before the campaign to more than 17 million.” free files in 2021. “

“Difficult stops” on the TurboTax website

The FTC lawsuit alleges that taxpayers who visit the TurboTax website for free tax returns face a number of “tough stops” that prompt them to upgrade to $ 59 or $ 119 for federal tax returns. (TurboTax charges an additional fee for state tax returns.) The complaint also stated: The misleading Intuit door-to-door ads described above bring consumers to the TurboTax site, claiming that consumers can file their taxes for free using TurboTax, but just there, many consumers come across screens informing them that they can not fill out and submit their taxes for free. In the case of Hard Stop monitors, this controversy comes after consumers have already set up a TurboTax account and have spent significant time entering sensitive personal and financial information into Intuit’s user interface. Customers are motivated “to upgrade to a paid version based on certain types of income, such as farm income, farm rental or farm equipment, home sales, previous year tax refunds or investments … [or] “When they’re looking for some tax rebates or rebates,” the FTC said. the return of their tax after their declarations have been prepared and are ready for submission “.