FTC Sues Creators of TurboTax for Allegedly Misleading Consumers

WASHINGTON —The Federal Trade Commission is suing the makers of TurboTax, Intuit Inc., over an allegedly “deceptive” ad campaign offering “free” services and then having charges appear as Americans file their taxes with the online software.

“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 Bureau of Consumer Protection, in a statement. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”

The lawsuit filed in the U.S. District Court in the Northern District of California comes as many Americans are rushing to file their taxes before the April 18 deadline. The commission estimated about two-thirds of Americans who file 1099s or work in the gig economy cannot take advantage of the free TurboTax service.

The commission has also asked the court to immediately “halt [Intuit’s] deceptive advertising immediately” as people are still filing their taxes this year, according to the commission’s statement.

Kerry McLean, executive vice president and general counsel of Intuit, said the company will fight the FTC in court, insisting the company’s advertisements have helped more people take advantage of the program.

“Over the past eight years, TurboTax products have helped nearly 100 million Americans file their taxes for free, and our most recent free advertising campaign has only accelerated the use of TurboTax free offerings, driving approximately 60% growth from 11 million free filers in 2018 before the campaign launched to more than 17 million free filers in 2021,” McLean said in a statement.

Americans making under $73,000 can use the Free File Program from the IRS. More information is available at irs.gov/freefile.

Madeline Hughes can be reached at [email protected].