The FTC is suing 'free' TurboTax

Person Doing Taxes
(Image credit: Shutterstock)

The maker of popular tax software platform TurboTax is facing a major legal battle with the Federal Trade Commission (FTC) over claims it misled customers.

Parent company Intuit is facing an FTC lawsuit over false advertising concerning its "free" platform, which the body claims has become less available in recent years.

If ruled against the company, the suit could allow millions of "free" TurboTax users to claim for losses or damages.

'Free' TurboTax

The FTC claims that Intuit is running a "bait-and-switch" operation for free TurboTax users, luring them in with the promise of a free service. However, after the user has gone through the lengthy process of entering all their personal information into the platform, TurboTax then demands a fee to file the return.

The FTC says that many users affected in this way simply pay the fee to get the process finished, with two-thirds of users who filed with TurboTax in 2020 were ineligible for the platform's free tier.

The suit follows several months of wrangling between the FTC and Intuit, and comes shortly after the company agreed to pay out $141 million to settle a separate lawsuit brought by several US states over exactly the same accusation.

Intuit had said that the settlement of this case, "affords the public all of the material relief the FTC seeks to obtain through this action," but the FTC continued to press its case, ruling that "the public interest warrants further litigation."

“It is disappointing that the FTC staff has chosen to resume its lawsuit, especially in light of Intuit’s settlement with all the state attorneys general, which we believe resolved the core of the FTC’s complaint,” said Kerry McLean, executive vice president and general counsel of Intuit. “We believe in the merits of our case and that a neutral decision maker will conclude that we have been clear and fair with our customers.”

The FTC filed its case against Intuit back in March 2022, noting that, "the commission is asking a federal court to put an immediate halt to Intuit advertising and has also authorized the filing of an administrative complaint alleging that the company's practices are illegal."

A preliminary date of March 27, 2023 has now be set for a hearing - just a few days ahead of the traditional April 15 deadline for US citizens to file individual income tax returns, one of the busiest times for TurboTax users (although the upcoming 2023 deadline will be Tuesday April 18).

Via The Register

Mike Moore
Deputy Editor, TechRadar Pro

Mike Moore is Deputy Editor at TechRadar Pro. He has worked as a B2B and B2C tech journalist for nearly a decade, including at one of the UK's leading national newspapers and fellow Future title ITProPortal, and when he's not keeping track of all the latest enterprise and workplace trends, can most likely be found watching, following or taking part in some kind of sport.