FTC lawsuit accuses Intuit of deceiving customers with 'free' TurboTax ad campaign
Intuit fired back, saying the government watchdog's 'arguments are simply not credible'
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The Federal Trade Commission announced Tuesday that it has filed a lawsuit against software giant Intuit, claiming the company's advertising campaign offering "free" tax filing services through its TurboTax software is "deceptive" and should be halted.
The Intuit Inc. TurboTax application is demonstrated on an Apple Inc. iPhone 6s in this arranged photograph taken in New York, U.S., on Feb. 15, 2016. (Photographer: Michael Nagle/Bloomberg via Getty Images) (Photographer: Michael Nagle/Bloomberg via Getty Images / Getty Images)
The federal watchdog argued in a press release that the ads are misleading because "most tax filers can't use the company's ‘free’ service 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."
The government agency claims that roughly two-thirds of tax filers could not use TurboTax's free product in 2020, and has asked a federal court to stop Intuit's marketing campaign that promises "free" filing despite disclaimers.
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"TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with charges when it’s time to file," said Samuel Levine, director of the FTC's Bureau of Consumer Protection. "We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season."
FILE PHOTO: Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S. (REUTERS/Andrew Kelly/File Photo / Reuters Photos)
But Intuit, which also makes Quickbooks, Mint, Credit Karma and Mailchimp, says the FTC's claims are unfounded and vowed to defend itself against the lawsuit.
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"The FTC’s arguments are simply not credible," said Kerry McLean, executive vice president and general counsel of Intuit. "Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep."
In a press release of its own, Intuit noted that it was a founding member of the Internal Revenue Service's Free File program, blasting the FTC for failing to acknowledge that the California-based company was fully compliant with IRS requirements.
The homepage of Intuit Inc.'s TurboTax website is displayed on a computer monitor. (Photographer: Andrew Harrer/Bloomberg via Getty Images / Getty Images)
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"The fact that Intuit complied with the rules and regulations of one government agency, but is now being targeted by another, demonstrates a significant disconnect," McClean said. "With the FTC’s action, companies will be much less willing to enter into public-private partnerships with the government that benefit consumers."
The FTC voted 3-1 in favor of taking action against Intuit.