TurboTax deceived consumers with its "free" offering, the FTC rules

[Alfonso Maruccia]

Death and taxes: Intuit has been found misleading US citizens regarding the true nature of its "free'" products. The tax filing software and services provided by the company must genuinely be free to warrant such labeling, according to the Federal Trade Commission.

The FTC has unanimously determined that Intuit engaged in a false advertising campaign regarding its tax filing software. The company, which produces TurboTax, the market leader in the tax filing business, violated Section 5 of the FTC Act by offering "free" financial software products that many consumers were unable to access.

According to the Commission's Final Order, Intuit cannot advertise or market any product or service as a free offering unless it is genuinely free for all customers. The software corporation must also clearly disclose the percentage of taxpayers that can access one of its free offerings, the FTC said. Furthermore, if a product is not free for the majority of consumers, Intuit must disclose that limitation as well.

The FTC order confirms the initial decision by Chief Administrative Law Judge D. Michael Chappell, who ruled that Intuit was promoting "free" tax filing tools that millions of consumers could not access. Workers who received a 1099 form in the gig economy, farmers, and other taxpayers were excluded from the free offering, the judge said, and around two-thirds of tax filers were not eligible for TurboTax's free product.

Intuit responded to the latest ruling by stating that the FTC issued a "deeply flawed decision," which the company has now appealed. According to Intuit, the FTC ruling is the result of a "biased and broken system" where the Commission serves as accuser, judge, and jury. The company expressed that it's not surprising that FTC Commissioners "ruled in favor of the FTC," as they have consistently done in every appeal for the last two decades.

Intuit has long lobbied against any potentially free tax filing service or even pre-filled forms provided by the IRS, a practice common in many developed countries. In May of last year, the company settled a class-action lawsuit with all 50 US states for encouraging millions of low-income citizens to use paid TurboTax software instead of free, federally supported tax filing services. As part of the settlement, roughly 4.4 million US citizens received a (modest) check from Intuit, with most customers receiving around $30.

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https://www.techspot.com/news/101629-turbotax-software-developer-intuit-deceived-consumers-free-offering.html

 

[WhoCaresAnymore]

I've used them for ages. I don't use the free, but it's overpriced. I only like the availability to pull up old returns and filing is easy as it imports the previous year.

 

[adamada72]

I used the free version a few years ago. At the end it wanted to charge me a high price, I ended the session and just bought the normal version which was cheaper.

 

[Fimbulvetr]

"Intuit has long lobbied against any potentially free tax filing service or even pre-filled forms provided by the IRS, a practice common in many developed countries." - so they actively lobby to keep taxes more difficult, and of course expensive, for the taxpayer. Why would you ever pay a company that is actively lobbying against your own best interest for the sake of their own profit? From what I understand, the entire tax preparation industry has long lobbied to stop attempts at simplifying the US tax code itself. More profit in keeping a patient sick and treating a chronic condition, instead of curing or making them well. What a sad, messed-up society we exist in.

 

[human7]

While the separation between judicial and executive branches is an issue (not just here, but in other cases as well), Intuit is simply in the wrong here. The judicial system is unlikely to change the ruling.

There's too much greed in corporations, which is a problem all over the place, such as in the medical sector. One solution: for the legislature to require every corp to be a public benefit corp and make that one of the two primary responsibilities they have to meet (the other one being the profit-motive that they already have today). It could go along way to solving much of our problems in so many sectors (if it had any teeth).

 

[RandomWAN]

I've stopped using them since the cost for the software was eating up what little tax returns I get (no free loans to the government).

 

[OldBosn]

I've been using their free version for many years; have never paid a penny. It's like most things that are offered for free, there is always a catch. You just have to read the choices and avoid clicking on the first bright red button that pops up. This FTC thing looks like nothing more than another money grab by the feds. It will only result in Intuit no longer offering the free version of their software.

 

[Jerry in WA]

Imagine a world without lobbyists destroying our lives for profit and without the corrupt politicians so willing to be pimped out for a dollar. The world could be a better place but greed has no bounds nor morality.

 

[atomicgirl]

I've been using their free version for many years; have never paid a penny. It's like most things that are offered for free, there is always a catch. You just have to read the choices and avoid clicking on the first bright red button that pops up. This FTC thing looks like nothing more than another money grab by the feds. It will only result in Intuit no longer offering the free version of their software.

Don't take this the wrong way, but that's not how American agencies work. American consumers file complaints to these agencies; the agencies then investigate to find out whether there's just cause to file a decision against the company or practice. There's no "money grab," as there's no fine being implemented here. TT is just forbidden from advertising their service as free. That's all. Again, no money grab.

 

[atomicgirl]

Imagine a world without lobbyists destroying our lives for profit and without the corrupt politicians so willing to be pimped out for a dollar. The world could be a better place but greed has no bounds nor morality.

There's no reason to imagine anything. Americans right now, as we speak, have the power to keep these lobbyists and greedy corporations in check. One of the things we can do is file complaints to the FTC or state attorney general, which is exactly what people did in this case and which is why Turbo Tax was finally forced to stop advertising its services as free. Americans can also lobby the lobbyists and cripple companies by way of boycott.

The reason why everything feels hopeless and out of control is that Americans stopped being politically active a long time ago. They also vote for the wrong politicians for stupid reasons. Half of these corrupt politicians were voted in because they were against [fill in ethnic minority, gender or political group here]. When they proved to be corrupt, their constituents kept voting them in anyway out of the satisfaction that they were sticking it to [fill in ethnic minority, gender or political group here].

If today, as I type this, more and more of us started getting more politically active and lobbied the lobbyists, more companies would be put in check. If we stopped voting politicians in based on culture war lines, same thing. It's never too late.

 

[ZedRM]

A company known for preying on the general public caught lying about "Free" offers? NOOO! Say it ain't so!!

 

[ZedRM]

The reason why everything feels hopeless and out of control is that Americans stopped being politically active a long time ago.

When the political parties present us with people ACTUALLY worth making the effort to vote for, then more people will care. As of late all we've had is creatures from the dark swamp running for office. It's been 16 years since we've had a candidate worthy of consideration.