FTC Bans TurboTax From Advertising Free Services

The Federal Trade Commission has cracked down on TurboTax, issuing an order prohibiting the company from calling its services “free” when most customers have to upgrade to paid services. TurboTax’s parent company is Intuit.

The order reads that the company is prohibited from misrepresenting itself as a no-cost service. Furthermore, it must only represent that a good or service is free if it provides free services to consumers.

“Respondent’s claims of free filing are false for roughly two-thirds of U.S. taxpayers, who do not meet Intuit’s simple tax return qualifications and are therefore ineligible to file for free with TurboTax,” it reads. Also, customers who run small businesses, work as independent contractors, or make over a certain income threshold cannot use the company’s free service. This is not noted in its advertising, reports 6ABC News.

The order reads that Intuit ran a “broad, enduring, and willful” deceptive marketing campaign to draw in customers with promises of free tax filing and then push them toward paid services. It suggests the company should disclose the percentage of customers who do qualify for the free service.

The Federal Trade Commission also wants copies or records of all consumer complaints and refund requests to Intuit, whether received directly or indirectly through a third party, and any responses afterward. The order requests all records that show the company is in full compliance with each provision of the order. 

The FTC opinion Monday piggybacked a September 2023 ruling that found Intuit engaged in deceptive marketing toward consumers. NPR quoted the company’s spokesperson, Derrick L. Plummer, who called the opinion “deeply flawed.”

Plummer believes the opinion is the result of a “biased and broken system” where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case.

“The order also sends a message across [the] industry — ‘free’ means free — not ‘free for a few’ or ‘free for some,’” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.