FTC sues Intuit over TurboTax's "bait-and-switch" free filing ads

The company is once again in regulatory hot water over what the FTC believes are deceptive ads created to lure in taxpayers with false promises.
Written by Michael Gariffo, Staff Writer

The US Federal Trade Commission (FTC) is suing Intuit to halt its ongoing attempts at "deceiving consumers with bogus advertisements pitching 'free' tax filing that millions of consumers could not use." 

The administrative complaint focuses on the company's continued airing of ads claiming customers will be able to file their taxes at no cost to them. The FTC made a point of noting how frequently the company uses the word "free" in its ads, up to and including airing TV commercials with the word being repeated incessantly. 

According to the regulator, the reality is that most taxpayers that attempt to use the free service spend significant amounts of time putting their information into TurboTax's filing system, only to be told far into the process that their supposedly free filing service would now require payment. 

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The FTC claims two-thirds of filers in 2020 would not have been able to use the free filing offer because it "is not available to millions of taxpayers, such as those who get a 1099 form for work in the gig economy, or those who earn farm income." 

Because of how deceptive ads such as these can be to the majority of viewerrwho will be unable to take advantage of them, the FTC is asking the court to "immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season."

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Intuit's TurboTax had previously participated in the Internal Revenue Service's (IRS') Free File program, which offers free federal and/or state filing for qualified individuals. However, the company bowed out of the program after previous tension between it, regulators, and angry filers that dealt with similarly shocking bills during previous years' tax seasons. The company continues offering its "free" filing tier of its own volition, allowing it to control which filers qualify for it and which don't. 

The FTC's complaint alleges the continued airing of these deceptive ads and its attempts to add charges after the fact is illegal under the FTC Act. It's asking for an immediate injunction to halt the promotions. 

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Readers interested in finding a tax filing provider that still participates in the IRS free file program can find more information at the IRS Free File website.

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