Intuit to Appeal Ruling That TurboTax Deceived Customers

Intuit, the technology company behind TurboTax and Credit Karma, said it will appeal a ruling by a Federal Trade Commission administrative law judge that the company deceptively promoted TurboTax as a free tax preparation service.

The ruling made in a lawsuit filed by the FTC was issued Wednesday but will remain sealed until Sept. 6 pending redactions, Politico reported Friday, citing a person with knowledge of the matter.

"No one should be surprised by the FTC's ruling given it came from an FTC-employed judge in a case the FTC brought before itself," Intuit spokesperson Derrick Plummer told Politico. "You can't make this stuff up. It's a flawed system and a groundless ruling. The FTC has ruled in its own favor in nearly every consumer protection case for the last two decades."

Appeals from administrative law judge rulings are first made to the FTC's commissioners, including Chair Lina Khan, who has vowed to crack down on corporate abuses. After that, Intuit, which is based in Mountain View, California, can go to a federal appeals court of its choice.

"Intuit has always been clear, fair, and transparent with our customers; and we remain committed to providing free tax preparation," Plummer said.

The FTC is supposed to be composed of five commissioners, with no more than three from each party. There are only three Democratic commissioners following the resignations of Republicans Christine Wilson in March and Noah Phillips in October. Wilson and Phillips were appointed to seven-year terms by then-President Donald Trump in 2018.

Administrative law Judge Michael Chappell's ruling requires Intuit to change how it advertises its TurboTax products, the person with knowledge of the matter told Politico. Among the changes, the company will no longer be able to use the phrase "simple returns only" when describing what tax forms qualify as free.

Instead, it will have to specifically name the forms, the person said. Intuit must also elaborate on the phrase "see if you qualify," by specifying most U.S. taxpayers do not qualify for free returns.

The FTC filed a lawsuit against Intuit in March 2022, claiming "much of Intuit's advertising for TurboTax conveys the message that consumers can file their taxes for free using TurboTax, even going so far as to air commercials in which almost every word spoken is the word 'free.'"

But the FTC claimed TurboTax "is only free for some users, based on the tax forms they need. 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."

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