FTC sues Intuit over TurboTax ‘free’ filing ad campaign

The Federal Trade Commission (FTC) on Tuesday announced it was suing Intuit, the owner of TurboTax, for allegedly deceiving consumers with “bogus” advertisements pitching free tax filings that millions of Americans do not qualify for.

The FTC is also asking a federal court to immediately halt “deceptive advertising” immediately, the agency said in a statement.

Agents argue that TurboTax has for years published misleading advertisements leading consumers to believe they can file taxes for free through the company, when in actuality, two-thirds of filers in 2020 could not qualify for the free filing.

“TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with charges when it’s time to file,” said Samuel Levine, the director of the Bureau of Consumer Protection, in a statement. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”

Intuit, a global technology company that also owns Mint and Credit Karma, published a press release on Monday saying the “the FTC’s arguments are simply not credible” and that free tax filing is available to 100 percent of Americans.

“Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep,” said Kerry McLean, executive vice president and general counsel of Intuit, in a statement. 

Intuit boasts says that it has increased the number of free tax filers from 11 million in 2018 to more than 17 million in 2021, a figure the company claims is the most in the industry.

For the past few years, Intuit and other tax filing companies have been scrutinized for some practices.

Investigative outlet ProPublica reported in 2019 that Intuit concealed its Free File page, via the Internal Revenue Service’s (IRS) Free File Program website, from search engines. The company also allegedly pushed filers to pay for the products that would otherwise be free under the IRS program. 

The report prompted the New York State Department of Financial Services to launch an investigation into tax filing companies. The state regulatory agency determined in 2020 that Intuit — along with H&R Block, TaxSlayer, TaxHawk and Drake Enterprises — engaged in “unfair and abusive practices” that undermined the ability of disadvantaged Americans to file with the IRS’s program.

After partnering with the Free File Program for roughly 20 years, Intuit left the program last year.

In the FTC lawsuit, agents say TurboTax advertisements air during major events like the Super Bowl. In one advertisement, the FTC claims TurboTax says: “That’s right, TurboTax Free is free. Free, free, free, free.”

But the FTC alleged that millions of Americans are locked out from the free filing for a variety of reasons, including if they work as independent contractors in the gig economy or earn farm income.