FTC Caught on Tax-Filing Service Providers: The Case of TurboTax and the Defense of Its Pretenders
The Federal Trade Commission cracked down on TurboTax, issuing a final order that prohibits the company from calling its services “free” when most customers end up having to upgrade to paid services.
More than one hundred million Americans have been helped by the company to file their taxes for free over the last decade, and the FTC’s action against the company is unnecessary because the core issues were settled in the agreement with the state attorneys general.
“The order also sends a message across industry – ‘free’ means free – not ‘free for a few’ or ‘free for some,’” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement yesterday.
The FTC’s final order, issued January 19th, bars Intuit from saying that any of its goods or services are free unless it’s free for all customers or unless the company clearly displays which percentage of consumers qualify or discloses that a majority of consumers aren’t actually eligible. The website says 37 percent of people qualify for free basic tax filing assistance.
“The character of the past violations is egregious. The commission says that for at least six years, the company ran deceptive ads to taxpayers.
The company struck a settlement with the attorneys general of all 50 states over similar complaints related to its supposedly free tax-filing services. The company did not accept any responsibility for their actions.
Intuit and the Commission: A case against a service that was freely provided at no charge to the public in the epsilon
“This decision is the result of a flawed system in which the Commission serves as accuser, judge, jury, and then appellate judge all in the same case,” he said in a statement.
“Instead, they were upgraded into costly deluxe and premium products,” Levine said in a statement. “‘free’ is a powerful lure that has long been understood by the Commission and has been deployed in scores of ads by Intuit.” Its attempts to qualify its free claim were not very effective.
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said the vast majority of Intuit’s customers couldn’t take advantage of what the company claimed it was providing at no charge.
After reading a ProPublica investigation that found the company had for years tried to stop any efforts to make it easier for Americans, New York Attorney Gen James started an inquiry into the company.