US FTC bars TurboTax maker Intuit from advertising 'free' services

By David Shepardson

WASHINGTON (Reuters) - The U.S. Federal Trade Commission on Monday barred TurboTax maker Intuit from advertising or marketing services as "free" when many consumers were in fact ineligible, saying the company had engaged in deceptive practices.

The maker of the popular TurboTax tax filing software said it would immediately appeal the decision. "We believe that when the matter ultimately returns to a neutral body we will prevail," it said, adding: "there is no monetary penalty in the FTC’s order, and Intuit expects no significant impact to its business.

Intuit shares closed up 1.4% at $630.61 on Monday.

The commission's final order, after an administrative ruling in September, said Intuit cannot advertise or market any service as free unless it was free to all consumers, or unless it disclosed properly the percentage of taxpayers that qualify for the free product.

The FTC said the character of prior violations was "egregious. For at least six years, Intuit blanketed the country with deceptive ads to taxpayers across multiple media channels."

The agency added: "Intuit continued running the ads, knowing that they led consumers to believe that they could file their returns for free, even though approximately two-thirds of taxpayers are not eligible."

Intuit said on Monday that it had always been "clear, fair, and transparent with its customers and is committed to free tax preparation."

Intuit in May 2022 agreed to pay $141 million in restitution to settle claims by all 50 U.S. states and Washington, D.C., that it tricked millions of customers into buying online TurboTax products that the company deceptively advertised as "free."

The settlement resolved claims that Intuit steered at least 4.4 million customers, many with low incomes, into buying its tax preparation products despite the ineligibility of those customers for free electronic filing through the Internal Revenue Service.

The settlement with the states called for Intuit to suspend ads containing slogans such as "TurboTax Free is free. Free free free free."

Under terms of the settlement with states, Intuit did not admit wrongdoing.

(Reporting by David Shepardson and Paul Grant in Washington; Editing by Dan Whitcomb and Matthew Lewis)