FTC bans TurboTax ad for "free" services

The Federal Trade Commission is barring Intuit from advertising its popular TurboTax product as free when most consumers have to pay to use the tax filing software, calling the practice deceptive.

The FTC's final order follows an administrative ruling in September prohibiting Intuit from marketing a service as free unless it is free for all customers, or unless the company made clear the percentage of taxpayers that would qualify for the free product.

Millions — or approximately two-thirds of tax filers — were ineligible to use TurboTax's free product in 2020, according to the FTC. The agency called the company's past violations "egregious" in laying out its case for a case-and-desist order. 

"For at least six years, Intuit blanketed the country with deceptive ads to taxpayers across multiple media channels," the FTC  opinion stated. 

Intuit said it would immediately appeal the FTC's order. "When the matter ultimately returns to a neutral body we will prevail," the company said on Monday. 

"Intuit has always been clear, fair and transparent with its customers and is committed to free tax preparation," the company added. Intuit said the FTC order contains no monetary penalty and will not significantly affect its business.

Intuit and government regulators have sparred for years over its tax preparation software. The company in 2022 agreed to pay $141 million over allegations its TurboTax software misled low-income Americans into paying to file their taxes when they were eligible to file for free. About 4.4 million taxpayers qualified for payments of up to $85 from Intuit under the settlement.

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.