- Intuit, the creator of TurboTax tax filing software, is set to appeal the latest decision in its ongoing legal battle with the Federal Trade Commission (FTC).
- Despite no financial penalty, the FTC has mandated that Intuit cannot run any form of advertising promoting free services unless all consumers can avail them, or if the exact percentage of qualifying taxpayers is correctly disclosed.
- In May 2022, Intuit paid $141 million towards a settlement to resolve allegations by all 50 US states and Washington, D.C., suggesting that it had falsely promoted its TurboTax products as free.
Intuit to Appeal FTC ruling
Intuit, the company behind TurboTax tax filing software, has announced its immediate appeal to the FTC’s recent decision. The company expressed confidence in overturning the ruling when presented to a neutral body, adding that the FTC’s ruling imposes no monetary penalties, and the ruling is not expected to cause significant business impacts.
Impact on Stocks
Intuit’s shares experienced a 1.4% increase, closing at $630.61 on Monday.
FTC’s Stance on Deceptive Advertising
The FTC’s final order followed an earlier administrative ruling in September. According to this order, Intuit is prohibited from advertising or marketing any service as free unless it is free to all consumers, or unless it discloses the correct percentage of taxpayers eligible for the free product.
The FTC emphasized the seriousness of prior violations, stating that for nearly six years, the company misled taxpayers through deceptive advertising across multiple platforms.
The agency accused Intuit of promoting its services falsely, leading customers to believe that they could file their returns for free, despite ineligibility.
Intuit’s Response and Settlement Payment
Despite these claims, Intuit said it has been transparent and committed to free tax preparation.
In May 2022, the company agreed to a hefty $141 million payment to settle claims from all 50 U.S states and Washington, D.C, accusing it of major customer deception by advertising its online TurboTax products as “free.”
The settlement resolved allegations that Intuit unfairly led at least 4.4 million customers, including many low-income earners, into purchasing its tax preparation products, even though these customers were not eligible for free electronic filing through the IRS.
Details of the Settlement
The settlement called for suspending ads containing slogans like “TurboTax Free is free. Free free free free.” However, under the terms of the settlement, Intuit has not admitted to any wrongdoing.
In terms of financial trading, this incident may cause a temporary fluctuation in Intuit’s stock prices. However, long-term effects are expected to be minimal as the company seeks to rectify its past wrongs and continues to enjoy a broad customer base.