FTC sues Intuit to stop TurboTax ‘bait-and-switch’ ads

(AP) – The Federal Trade Commission is suing TurboTax maker Intuit, saying its ads for “free” tax filing misled consumers. Intuit says he will fight the suit.

The consumer protection agency said on Tuesday that millions of consumers can’t actually use the free tax preparation software option – two-thirds of filers in 2020. They aren’t eligible, according to the agency, whether they are gig workers or earn farm income, for example.

“TurboTax bombards consumers with ads for ‘free’ tax filing services, then hits them with fees when it’s time to file,” Samuel Levine, director of the Consumer Protection Bureau, said in a statement. “We’re asking a court to immediately stop this bait and change and protect taxpayers at the height of filing season.”

The agency says Intuit has focused on the word “free” in its ads for years, running them at major events like the Super Bowl. The FTC has asked a federal judge to order Intuit to stop what it said were deceptive Intuit ads during the tax season rush. This year’s tax filing deadline is April 18.

Intuit, based in Mountain View, Calif., said in a statement late Monday night that it would contest the lawsuit. “Far from driving taxpayers away from free tax preparation offers, our free advertising campaigns have led more Americans to file their taxes for free than ever before and have played a pivotal role in raising awareness about free tax preparation. tax returns,” said Kerry McLean, executive vice president and general counsel of Intuit. McLean said nearly 100 million Americans have filed taxes for free over the past eight years using TurboTax.

The FTC voted 3-1 in favor of filing the lawsuit. The FTC’s suit was filed Monday in the US District Court in Northern California.

Intuit offered a free version of TurboTax through the IRS Free Files Program for low-income filers until 2021, when they left the program, saying they wanted to “focus on innovation additional in a manner not permitted by current free file guidelines”.

The Free File system, a partnership between the tax industry and the IRS, was designed to help low- and middle-income taxpayers file online, but it has long been criticized for being too poorly supported. ProPublica reported on efforts by the tax preparation industry to entice consumers to use paid products.

Intuit also faces litigation in California from Los Angeles and Santa Clara County, whose attorneys have filed lawsuits saying the company misled taxpayers.

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