FTC Sues Intuit: Stop Saying TurboTax Is Free

The Federal Trade Commission is suing TurboTax maker Intuit, saying its ads for “free” tax filing misled consumers, the AP reports. Intuit says it will fight the suit. The consumer protection agency said Tuesday that millions of consumers cannot actually use the free tax-prep software option—two-thirds of tax filers in 2020. They are ineligible, the agency says, if they are gig workers or earn farm income, for example. “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, 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.”

The agency says Intuit has for years focused on the word “free” in its ads, running them during major events like the Super Bowl. The FTC has asked a federal judge to order Intuit to stop what it said were Intuit’s deceptive ads during the rush of tax season. This year’s tax filing deadline is April 18. The FTC voted 3-1 in favor of filing the suit. The FTC complaint was filed Monday in US District Court in Northern California. Intuit, based in Mountain View, Calif., said in a statement late Monday night that it will challenge the lawsuit. Intuit also faces litigation in California from Los Angeles and Santa Clara County, whose attorneys filed suits saying the company deceived taxpayers.

"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,” says Kerry McLean, executive vice president and general counsel of Intuit. McLean said nearly 100 million Americans have filed taxes for free over the past eight years using TurboTax. In a Tuesday filing, Intuit said it had already removed ads that the FTC says were deceptive after meeting with FTC Chair Lina Khan. The company said it informed the agency on March 24 that “it would voluntarily ‘pull down the ‘free, free, free’ TV ads for the remainder of the tax season' in response to concerns that those advertisements were deceptive." (More TurboTax stories.)