FTC sues Intuit for false advertising, says 'free' TurboTax isn't always free
(2022/03/29)
- Reference: 1648586619
- News link: https://www.theregister.co.uk/2022/03/29/ftc_tax_intuit/
- Source link:
Intuit, makers of the tax-filing software TurboTax, deceives folks with false advertising and claims its product is free to use when it isn't always free, the US Federal Trade Commission claimed in a lawsuit filed Monday.
Tens of millions of US citizens and other taxpayers use TurboTax to file their annual tax returns. The program helps peeps prepare documents, and automatically estimates any tax refunds or rebates they might be eligible to receive. Intuit promotes TurboTax's Free Edition software, claiming users filing simple tax returns don't have to pay anything to use it at all.
But the FTC disagrees. The market watchdog asked the courts to issue a temporary restraining order and grant a preliminary injunction against Intuit to prevent the company from promoting TurboTax as a free service.
[1]
"In truth, TurboTax is only free for some users, based on the tax forms they need," according to the lawsuit
[3]
[4]
"For many others, Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free; they will need to upgrade to a paid TurboTax service to complete and file their taxes."
[5]Credit Karma's enriched: Turbo Tax daddy Intuit snaps up personal finance platform for $7bn
[6]Intuit branches out into email marketing by splashing $12bn on Mailchimp acquisition
[7]Legal bombs fall on TurboTax maker Intuit for 'hiding' free service from search engines
[8]Ok Google, please ignore this free tax filing code so we can keep on screwing America
Intuit has changed its definition of what counts as a simple tax return over time, the FTC alleges, making less people eligible for the free TurboTax version. Under the 2021 tax year, only those who file tax returns using IRS Form 1040 can use TurboTax for free.
Workers reporting income via Form 1099 are not eligible to use TurboTax for free regardless of their salaries. Independent contractors, for example, such as those drivers for ride-hailing apps or food delivery services do not qualify to use the software for free. When they sign up to use TurboTax, they are often told they cannot use the Free Edition and must pay for other services like its Deluxe or Premier software.
Claims of obfuscation
Intuit does not always clearly explain that TurboTax is only free for some folks in its commercials and on its website, the FTC claims in the lawsuit. "Given this advertising, reasonable consumers may believe that the TurboTax products and services Intuit advertises as free are free for them—that they can file their taxes for free using TurboTax," according to the court documents.
People are then led to believe they can use TurboTax at no cost to file their taxes, and spend their time filling out the forms online only to be told at the end they will need to pay for upgraded versions of the software, it is alleged.
"Consumers who clicked on the orange button saying 'File for $0' on the [TurboTax home page] were brought to a login screen to commence an online, automated 'interview' to begin entering information to file their taxes. Consumers who were not eligible for the "freemium" version of TurboTax would not learn they were ineligible until they had already invested significant time and effort creating an account and inputting their sensitive personal and financial information into TurboTax," the lawsuit said.
[9]
People with low and middle levels of income are eligible to file their taxes for free through the IRS File Free Program, a collaboration between the IRS and financial software companies like Intuit. Intuit [10]left the program in 2021.
The company went to great lengths to direct consumers away from filing their taxes for free when it was part of the IRS File Free Program, the FTC claims. In the 2018 tax year, Intuit [11]allegedly hid its Free File landing page from search engines for approximately five months during the peak tax season.
The FTC accused Intuit of engaging in "unlawful acts and practices over a period of many years", including deceptive advertising and marketing of TurboTax. It asked the court to force the company to temporarily stop promoting its tax-filing software, whilst its administrative proceedings investigating the company are ongoing.
[12]
"The FTC's arguments are simply not credible," Kerry McLean, executive vice president and general counsel of Intuit, [13]said in a statement. "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."
The firm's most recent free advertising campaign has seen approximately 60 percent growth, from 11 million free filers in 2018 to more than 17 million free filers in 2021, she added. ®
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[2] https://regmedia.co.uk/2022/03/29/ftc_vs_intuit.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
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[5] https://www.theregister.com/2020/02/25/intuit_buys_credit_karma_for_7bn/
[6] https://www.theregister.com/2021/09/14/intuit_mailchimp_acquisition/
[7] https://www.theregister.com/2019/05/14/turbotax_intuit_sued/
[8] https://www.theregister.com/2019/04/26/us_tax_turbotax/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://freefile.intuit.com/
[11] https://www.theregister.com/2019/05/14/turbotax_intuit_sued/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://www.intuit.com/blog/taxpayer-empowerment/intuit-responds-to-complaint-from-u-s-federal-trade-commission/
[14] https://whitepapers.theregister.com/
Tens of millions of US citizens and other taxpayers use TurboTax to file their annual tax returns. The program helps peeps prepare documents, and automatically estimates any tax refunds or rebates they might be eligible to receive. Intuit promotes TurboTax's Free Edition software, claiming users filing simple tax returns don't have to pay anything to use it at all.
But the FTC disagrees. The market watchdog asked the courts to issue a temporary restraining order and grant a preliminary injunction against Intuit to prevent the company from promoting TurboTax as a free service.
[1]
"In truth, TurboTax is only free for some users, based on the tax forms they need," according to the lawsuit
[2]PDF
filed in a San Jose, California, federal district court.[3]
[4]
"For many others, Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free; they will need to upgrade to a paid TurboTax service to complete and file their taxes."
[5]Credit Karma's enriched: Turbo Tax daddy Intuit snaps up personal finance platform for $7bn
[6]Intuit branches out into email marketing by splashing $12bn on Mailchimp acquisition
[7]Legal bombs fall on TurboTax maker Intuit for 'hiding' free service from search engines
[8]Ok Google, please ignore this free tax filing code so we can keep on screwing America
Intuit has changed its definition of what counts as a simple tax return over time, the FTC alleges, making less people eligible for the free TurboTax version. Under the 2021 tax year, only those who file tax returns using IRS Form 1040 can use TurboTax for free.
Workers reporting income via Form 1099 are not eligible to use TurboTax for free regardless of their salaries. Independent contractors, for example, such as those drivers for ride-hailing apps or food delivery services do not qualify to use the software for free. When they sign up to use TurboTax, they are often told they cannot use the Free Edition and must pay for other services like its Deluxe or Premier software.
Claims of obfuscation
Intuit does not always clearly explain that TurboTax is only free for some folks in its commercials and on its website, the FTC claims in the lawsuit. "Given this advertising, reasonable consumers may believe that the TurboTax products and services Intuit advertises as free are free for them—that they can file their taxes for free using TurboTax," according to the court documents.
People are then led to believe they can use TurboTax at no cost to file their taxes, and spend their time filling out the forms online only to be told at the end they will need to pay for upgraded versions of the software, it is alleged.
"Consumers who clicked on the orange button saying 'File for $0' on the [TurboTax home page] were brought to a login screen to commence an online, automated 'interview' to begin entering information to file their taxes. Consumers who were not eligible for the "freemium" version of TurboTax would not learn they were ineligible until they had already invested significant time and effort creating an account and inputting their sensitive personal and financial information into TurboTax," the lawsuit said.
[9]
People with low and middle levels of income are eligible to file their taxes for free through the IRS File Free Program, a collaboration between the IRS and financial software companies like Intuit. Intuit [10]left the program in 2021.
The company went to great lengths to direct consumers away from filing their taxes for free when it was part of the IRS File Free Program, the FTC claims. In the 2018 tax year, Intuit [11]allegedly hid its Free File landing page from search engines for approximately five months during the peak tax season.
The FTC accused Intuit of engaging in "unlawful acts and practices over a period of many years", including deceptive advertising and marketing of TurboTax. It asked the court to force the company to temporarily stop promoting its tax-filing software, whilst its administrative proceedings investigating the company are ongoing.
[12]
"The FTC's arguments are simply not credible," Kerry McLean, executive vice president and general counsel of Intuit, [13]said in a statement. "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."
The firm's most recent free advertising campaign has seen approximately 60 percent growth, from 11 million free filers in 2018 to more than 17 million free filers in 2021, she added. ®
Get our [14]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://regmedia.co.uk/2022/03/29/ftc_vs_intuit.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
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[5] https://www.theregister.com/2020/02/25/intuit_buys_credit_karma_for_7bn/
[6] https://www.theregister.com/2021/09/14/intuit_mailchimp_acquisition/
[7] https://www.theregister.com/2019/05/14/turbotax_intuit_sued/
[8] https://www.theregister.com/2019/04/26/us_tax_turbotax/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://freefile.intuit.com/
[11] https://www.theregister.com/2019/05/14/turbotax_intuit_sued/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YkOBlRlxkic7WVgUmyhgCAAAAIc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[13] https://www.intuit.com/blog/taxpayer-empowerment/intuit-responds-to-complaint-from-u-s-federal-trade-commission/
[14] https://whitepapers.theregister.com/
Re: So true
ShadowSystems
I can confirm that level of BS from Intuit.
After creating an account & wasting the better part of a day trying to get my screen reader to make any sense of their site, entering in all my details, & trying to file for free, only to get slapped with the "you need to pay to file" bit, I killed the account & took my paperwork to a local tax office.
It took the Human preparer all of *Ten. Fekkin. Minutes* to fill out the form, ask me to sign the form, & tell me that my refund should reach me in a few weeks. Total charge: zero. Why? Because the tax preparer was an actual member of the IRS & the free filing option is supposed to be *LAW*.
I don't know what Intuit thinks they're trying to pull, but I hope the judge nails those fuckers to a wall.
Classic bait and switch
Anonymous Coward
but has the FTC finally grown teeth big enough to bite the hand that feeds congress? All attempts to reform this mess tend to die quietly on capitol hill with no meaningful action after the election year grandstanding.
At the end of the day I wish them the best, but we should also be fighting for the state and federal governments to just actually tell us what they think we owe them us file our taxes directly and electronically. We don't need to support this racket of middlemen and their shady practices. Intuit can still sell people and autofile option for Quickbooks/Quicken users and keep their doors open. They neither deserve or are due to be subsidized by the government or the federal tax payer.
So true
I ran into this with my daughter. She had one more form and was required to pay to upgrade then pay to file last year. After spending 40 minutes entering the data and then getting to the point where your ready to file, it pops up, Oh, that one extra form is only available on the paid version and you will need to pay extra to file the state as well. I was not happy...