FTC Upholds September Ruling Finding Intuit’s ‘Free’ Products Advertising Deceptive

Intuit, the maker of TurboTax tax filing software, has been found to have engaged in deceptive advertising practices, according to an Opinion and Final Order issued by the Federal Trade Commission (FTC).

The commission ruled that Intuit violated the FTC Act by running ads for “free” tax products and services that were not available to many consumers, the FTC said in a Monday (Jan. 22) press release.

“The Commission’s opinion finding that Intuit has engaged in a ‘broad, enduring and willful’ deceptive advertising campaign is a major win for consumers and honest marketers,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said Monday in a statement.

Reached for comment by PYMNTS, Intuit spokesperson Tania Mercado said in an emailed statement that Intuit has appealed “this deeply flawed decision” and expects to prevail when the matter is decided by a neutral body.

“Absolutely no one should be surprised that FTC Commissioners — employees of the FTC — ruled in favor of the FTC as they have done in every appeal for the last two decades,” the statement said. “This decision 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 FTC’s decision upholds the September opinion of Chief Administrative Law Judge D. Michael Chappell, who concluded that Intuit’s advertising was deceptive and in violation of Section 5 of the FTC Act, according to the FTC press release. The commission stated that Intuit’s defenses lacked merit and ordered the company to cease making deceptive claims as outlined by the complaint counsel from the Bureau of Consumer Protection.

As part of the Final Order, Intuit is prohibited from advertising or marketing any product or service as free unless it is genuinely free for all consumers, the release said. Alternatively, if the product or service is not free for a majority of consumers, Intuit must clearly and conspicuously disclose the percentage of taxpayers or consumers that qualify for the free offer.

The order also requires Intuit to disclose all terms, conditions and obligations necessary to obtain the “free” product or service, per the release. In cases where space constraints prevent the inclusion of all terms and conditions in the advertisement itself, Intuit must disclose either that a majority of consumers do not qualify for free (if true) or the percentage that do, and provide a link to the detailed terms and conditions.

The order also prohibits Intuit from misrepresenting any material facts about its products or services, including price, refund policies and consumers’ ability to claim tax credits or deductions or file taxes accurately without using TurboTax’s paid service, the release said.