FTC Judge Says Intuit Must Stop Saying TurboTax Is ‘Free’
Intuit was dealt a setback in its marketing efforts for TurboTax, with an FTC judge saying the company broke the law and must stop calling it “free.”
Americans earning less than $69,000 a year are eligible for free tax preparation. While Intuit has offered free filing services, the company has repeatedly found itself in hot water for making it difficult to find its Free File option. Lawmakers have castigated the company for essentially scamming consumers, as they outlined in a letter to Intuit’s CEO:
We are writing regarding your company’s ongoing pattern of hiring former regulators to defend TurboTax products that scam American taxpayers into paying for services that should be free.
The FTC has brought a complaint against the company, with Chief Administrative Law Judge D. Michael Chappell ruling in favor of the FTC and issuing a cease-and-desist against the company that would remain in effect for 20 years.
The cease-and-desist says Intuit cannot advertise its services as “free” unless it is free for all consumers or all terms and conditions required for receiving the free service are clearly stated:
In summary, the Proposed Order prohibits Respondent from misrepresenting in its “advertising, marketing, promoting, or offering for sale of any goods or services” any material fact, “expressly or by implication,” including cost and various conditions for use (Section I, II); and requires Respondent to refrain from representing that a good or service is free, unless (A) the good or service is free for all consumers or; (B) all terms and conditions for receiving the free good or service are set forth “Clearly and Conspicuously” at the outset of the offer “so as to leave no reasonable probability that the terms of the offer might be misunderstood” (Section I.A, B) (emphasis added). In addition, “if the goods or services are not Free for a majority” of United States taxpayers, this fact must be “disclosed Clearly and Conspicuously” at the outset (Section I.C).
Needless to say, Intuit says it will appeal the decision, slamming the fact that the judge who handed it down is an FTC administration judge. Intuit also maintains there is no need for a cease-and-desist since the company already stopped the false advertising that led to the complaint.
In the decision, however, Judge Chappell cited multiple case precedents demonstrating that cease-and-desists are commonly granted in cases when the behavior has already stopped, especially if there is any reason to believe the behavior may eventually resume.
