TurboTax maker Intuit barred from advertising 'free' tax services without disclosing who's eligible

This is a display of TurboTax on display in a Costco Warehouse in Pittsburgh on Thursday, Jan. 26, 2023. U.S. regulators have barred TurboTax maker Intuit Inc. from advertising its services as “free” unless they are free for all customers, or if eligibility is clearly disclosed. In an opinion and final order, the Federal Trade Commission ruled that Intuit engaged in deceptive practices by running ads claiming consumers could file their taxes for free using TurboTax — when in fact many taxpayers did not qualify for such free offerings. (AP Photo/Gene J. Puskar, File)

NEW YORK (AP) — U.S. regulators have barred TurboTax maker Intuit Inc. from advertising its services as “free” unless they are free for all customers, or if eligibility is clearly disclosed.

In an opinion and final order issued Monday, the Federal Trade Commission ruled that Intuit engaged in deceptive practices by running ads claiming consumers could file their taxes for free using TurboTax though many people did not qualify for such free offerings.

“The character of the past violations is egregious," reads the FTC commissioners' opinion, which details Intuit ads across TV, radio and online over the years. "Intuit blanketed the country with deceptive ads to taxpayers across multiple media channels.”

In addition to prohibiting Intuit from marketing its products or services as free unless there's actually no cost for everyone, the FTC's order requires Intuit to disclose what percentage of consumers are eligible and note if a majority of taxpayers do not qualify.

Terms and conditions to obtain a free good or service must also be clearly disclosed or linked to if ad space is limited, the FTC said in its order. The order also bars Intuit from “misrepresenting any material facts about its products or services,” including refund policies and price points.

In a statement sent to The Associated Press Tuesday, Intuit said it had appealed what it called the FTC's “deeply flawed decision.”

“This decision is the result of a biased and broken system where the Commission serves as accuser, judge, jury, and then appellate judge all in the same case," Intuit stated. The California company later added that it believes it will prevail “when the matter ultimately returns to a neutral body.”

Monday's opinion and final order upholds an initial decision from FTC chief administrative law judge D. Michael Chappell, who ruled that Intuit violated federal law by engaging in deceptive advertising back in September.

There was no financial penalty in the FTC's order, but Intuit has previously faced hefty charges over the marketing of “free” services. In a 2022 settlement signed by the attorneys general of all 50 states, Intuit agreed to suspend TurboTax’s “free, free, free” ad campaign and pay $141 million in restitution to nearly 4.4 million taxpayers nationwide.

Settlement checks were sent out last year. Those impacted were low-income consumers eligible for free, federally-supported tax services — but paid TurboTax to file their federal returns due to “predatory and deceptive marketing,” New York Attorney General Letitia James said.