The feds just slapped TurboTax with a lawsuit for its “free” filing claims
You know those “free, free free free” commercials? Yeah, not only are they annoying, but they’re untrue too.
Have you paid money to file your taxes despite using a service that claimed to be “free?” Then odds are, you got roped in by the deceptive advertising of Intuit, the parent company of TurboTax. ProPublica blew the lid off the company’s shell game in 2019, revealing how Intuit intentionally hid free filing options to squeeze money out of consumers — and the federal government is finally going to do something about it. On Tuesday, the Federal Trade Commission announced it is suing Intuit for repeatedly misleading Americans in the name of profit.
TurboTax is among the most used services for tax filing, with 56 million people submitting their annual income and earnings through the service in 2021. The appeal is obvious: TurboTax runs constant ads come tax season that boast about free filing, including some commercials that just repeat the word “free” over and over. That makes it quite surprising when, once you’ve entered all your information and go to file your taxes, you’re presented with a fee that you have to pay in order to submit the documents to the government.
According to an investigation by ProPublica, Intuit spent a lot of time and money intentionally drawing people in with deceptive claims of “free” filing, only to bait and switch them with a paid service. That included hiding its actual free product from appearing in search results, running tons of ads marketing a “free” service that isn’t actually free, and promoting “discounts” for military members who could file for free. It was pretty profitable for the company, too! An audit found that at least 14 million Americans were charged for taxes they could have filed for free, generating nearly $1 billion in revenue, according to the Treasury Inspector General for Tax Administration.
Intuit has insisted all of this is cool and good, actually. The company’s CEO has said the decision to push people into paid products was in “the best interest of taxpayers.” In response to the FTC lawsuit, the company’s executive vice president Kerry McLean issued a statement claiming its ads were “central to raising awareness of free tax prep,” which is cute.
Hopefully, the FTC’s lawsuit is just the start of an attempt to dismantle the tax prep industry, which only exists because companies like Intuit and H&R Block have conspired to make sure you have to go through them to file your taxes. The government has all of your information already, these companies are just conduits for confirming it; they are charging to serve as the middle man when they are not needed.
Hitting Intuit with a massive punishment for its deceptive advertising is a good start. Killing the industry that it has manufactured and protected through massive lobbying efforts would be even better.