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Intuit Appeals FTC Order Restricting “Free” Advertising for TurboTax Services

Intuit, the maker of TurboTax software, has chosen to appeal a recent order from the US Federal Trade Commission (FTC), barring the company from advertising its services as "free" without meeting specific criteria for users. The Commission's order, issued on January 22, 2024, instructs the company to cease promoting services as free unless they genuinely meet the criteria for most users, or alternatively, disclose the percentage of users eligible for free services. In addition, Intuit must transparently outline the terms, conditions, and obligations associated with their purportedly free offerings.

The Commission's decision, voted on unanimously, follows a ruling against Intuit in September of the previous year. The regulatory body asserts that Intuit's widespread advertisements, heavily emphasizing the term "free," mislead consumers into believing they can file their taxes without charge using TurboTax. According to the FTC's case summary, almost two-thirds of tax filers were unable to utilize TurboTax's free version in 2020.

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In response to the order, Intuit issued a statement announcing its immediate decision to appeal. The company expressed confidence in prevailing when the matter returns to an impartial body. Intuit emphasized that there is no monetary penalty associated with the FTC's order, and it anticipates no significant impact on its business.

TurboTax stands as one of the largest software products aiding US citizens in filing tax returns. However, this is not the first instance of Intuit facing regulatory scrutiny. Approximately two years ago, the company agreed to pay $141 million to settle claims from 50 US states and Washington DC. The settlement addressed allegations that Intuit deceived millions of customers into purchasing online products from TurboTax. As part of the settlement, Intuit committed to discontinuing the use of deceptive slogans, such as "TurboTax Free is free. Free Free Free Free."

The settlement also addressed claims that Intuit directed around 4.4 million users, many from low-income segments, to purchase tax filing products despite being eligible for free electronic filing through the Internal Revenue Service (IRS).

The FTC had previously alleged that TurboTax is free for only a select group of users, requiring the majority to make a purchase. The lawsuit asserted that after users invested time inputting sensitive personal and financial information into TurboTax, they were informed they could not continue for free and needed to upgrade to a paid TurboTax service to complete and file their taxes.

An investigation by ProPublica in 2019 revealed Intuit's extensive lobbying efforts to maintain the complexity of tax filing in the US, ensuring the continued relevance and necessity of TurboTax software.

As the legal battle unfolds, the outcome of Intuit's appeal will significantly impact how the company advertises its services and addresses the regulatory concerns raised by the commission.