Feds Charge TurboTax Over Deceptive Advertising

(LibertySociety.com) – Software company Intuit, which makes the tax preparation application TurboTax, was slapped with an order from the Federal Trade Commission (FTC) on January 22, just as tax season is set to begin for Americans. The order, which was approved in September of last year, prohibits the company from claiming in advertisements or marketing campaigns that its services are free. The commission said that the only way Intuit could make the claim is if it provided all consumers with free tax preparation or listed the percentage of customers who have qualified for its free services.

The FTC said that “approximately two-thirds of taxpayers are not eligible” for Intuit’s free services, and that the company had used “deceptive ads to taxpayers across multiple media channels.” FTC’s Bureau of Consumer Protection director Samuel Levine said that most customers were ineligible for the free services and were instead directed to choose deluxe and premium packages. Many were independent contractors with 1099 forms or people who earned income from farming.

Intuit said that it would appeal the ruling in federal court and expressed confidence that it would be successful. The company also boasted its commitment to transparency and fairness, as well as its dedication to providing taxpayers with free services. The order from the FTC did not include a fine. The commission also cited the company’s previous violations in the order. Nearly two years ago, Intuit settled a lawsuit with all 50 states and Washington D.C. for $141 million. New York Attorney General Letitia James and Tennessee Attorney General Herbert H. Slatery III led the investigation and found that the company engaged in campaigns to prevent efforts to make the tax-filing process simpler.

The claim argued that Intuit fooled customers with its free tax preparation advertisements, only for them to learn that they were not eligible after spending hours in the filing process. The claimants estimated that 4.4 million customers were affected. Although the company agreed to the settlement, it did not admit to any wrongdoing. Customers began receiving checks between $30 and $85 from the company in May of last year.

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