TurboTax isn’t allowed to say it’s ‘free’ anymore

The Federal Trade Commission cracked down on TurboTax, issuing a final order that prohibits the company from calling its services “free” when most customers end up having to upgrade to paid services.

Parent company Intuit had advertised TurboTax as “Free, free free free,” even though a majority of customers were in fact ineligible for free services. The Federal Trade Commission sued TurboTax in 2022 over misleading advertising, and the FTC’s chief administrative law judge announced an initial decision in September saying Intuit “engaged in deceptive advertising in violation of Section 5 of the FTC Act.”

“The character of the past violations is egregious. For at least six years, Intuit blanketed the country with deceptive ads to taxpayers across multiple media channels,” the commission says in its recent opinion.

The FTC’s final order, issued January 19th, bars Intuit from saying that any of its goods or services are free unless it’s free for all customers or unless the company clearly displays which percentage of consumers qualify or discloses that a majority of consumers aren’t actually eligible. Now, the TurboTax website says roughly 37 percent of filers qualify for its “free” basic tier of tax filing assistance.

“The order also sends a message across industry – ‘free’ means free – not ‘free for a few’ or ‘free for some,’” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement yesterday.

Intuit is appealing the FTC’s decision. “There is no monetary penalty in the FTC’s order, and Intuit expects no significant impact to its business,” the company said in a statement yesterday.

Intuit agreed to pay $141 million in restitution to some 4.4 million customers in 2022 after New York Attorney General Letitia James found “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to.”

If you’re reluctant to use TurboTax, there’s some hope on the horizon. The IRS is launching its own free tax filing software called Direct File this year. It’s available as a pilot in 12 states, and the IRS says it’s “expected to be more widely available in mid-March.”