Still Terrible: Intuit Hit By FTC Lawsuit Over Deceptive ‘Free Tax Filing’ Advertising Practices
from the it's-about-time dept
It must be tax season, because here we are yet again talking about Intuit and the company’s skullduggery when it comes to offers for “free” tax filing. You can go back and look at the plethora of posts we have done on all of this. The quick summary for you is that Intuit has deceptively advertised “free to file” programs for those it later says don’t qualify for free filing once the customer is nearly done inputting tax information, and that Intuit has had a long history of doing everything possible to hide the actual free options available to consumers in order to instead milk money from low-income taxpayers and military veterans. Notably, Intuit participated in the IRS’ free filing program, though the IRS actually announced plans to cut out the third parties in part because of Intuit’s bullshit practices.
But if you thought that Intuit would have learned any kind of lesson from all of this bad press and federal government scrutiny, you’d be sorely mistaken. Intuit continued advertising its TurboTax product as a method for “free filing” of taxes, in many cases in ads that made it sound like no other word other than “free” even existed in the English language. Instead of the IRS, this time it’s the FTC that has come knocking on Intuit’s doors, having filed an administrative complaint against the company for deceptive advertising. You can see the entire complaint embedded, but the FTC’s site has a nice summary of what it’s after here.
The Commission alleges that the company’s ubiquitous advertisements touting their supposedly “free” products—some of which have consisted almost entirely of the word “free” spoken repeatedly—mislead consumers into believing that they can file their taxes for free with TurboTax. In fact, most tax filers can’t use the company’s “free” service because it is not available to millions of taxpayers, such as those who get a 1099 form for work in the gig economy, or those who earn farm income. In 2020, for example, approximately two-thirds of tax filers could not use TurboTax’s free product.
“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. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”
Is this kind of too late given how deep into tax season we are? Yes! Do I believe that even this action will be enough to convince Intuit to stop being Intuit? Only if very real dollar amounts are involved in this action, which I don’t believe will be the case. But what this absolutely does represent is a continuation of the uptick in federal involvement and pressure on the company for what are absolutely bald-faced deceptive advertising practices.
The reason Intuit does all of this is because it gets to decide for itself who its free program applies to. Very little is done in advertising to alert the public that there are fairly strict restrictions for the free program, instead leading many consumers to spend time gathering and entering all of their tax information into TurboTax’s “free” filing website… only to be told at the very end that they don’t qualify to file for free. At that point, many in the public either give up on the dream of filing for free, or simply believe that they cannot file for free anywhere. So they fork over money to Intuit.
As detailed in the complaint, Intuit engaged in a years-long marketing campaign centered on the promise of “free” services. These ads have run during major events, including the Super Bowl, and have also aired during this year’s NCAA Basketball Tournament. In spite of this advertising, many consumers who took the time to gather their documents, entrust their personal information to Intuit, and begin the filing process found that they could not file their taxes for free.
The FTC’s involvement is a good start. But federal action needs much bigger teeth than what is on offer from the FTC if the government wants to put a stop to Intuit’s bullshit.
Filed Under: deceptive advertising, free file, free filing, ftc, taxes
Companies: intuit
Comments on “Still Terrible: Intuit Hit By FTC Lawsuit Over Deceptive ‘Free Tax Filing’ Advertising Practices”
I swear we’ve seen this before.
At some point the idea of having a parasitic business lobbying to make the tax code more complex & then luring people into use their “free” products that don’t exist should seem like a really bad idea.
All the paperwork goes to the government, perhaps its time to let the government do the math, as they should know the code inside and out.
Then perhaps one could see the numbers of those making the most paying the least and wonder why the system works that way. I mean you’d think voters would vote to have those making the most pay at least as much as they do but for some reason people making $20K a year flip out and scream when the idea of taxing billionaires is horrible. It won’t effect you at all, except maybe you might be able to pay less while those people pay their fair share, so why are you fighting against it??
It makes as much sense as the people who decry Obamacare while enjoying their ACA coverage…
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You may be thinking of this, from 2019:
Lawmakers Want FTC To Investigate H&R Block, TurboTax
There have been calls for this for years. Part of the problem is that there have been vacancies on the FTC for years. There were vacancies during the Trump Administration and there’s still one vacancy now. I’m a little surprised they even got this far; I guess this is the sort of thing that’s so obvious it’s got bipartisan support.
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“Then perhaps one could see the numbers of those making the most paying the least and wonder why the system works that way.”
I don’t recall the exact source of the quote, but there’s a saying that the poor in the US don’t see themselves as poor, only as temporarily embarrassed millionaires. Which is why such nonsense as “trickle down economics” gained a foothold, but people in the US pay way more per capita on public healthcare while not being able to access it and tax cuts for the rich is an acceptable solution to the lack of funds for public programs.
“It makes as much sense as the people who decry Obamacare while enjoying their ACA coverage”
There were literally people saying get the government out of Medicare during the debates that led to that heavily compromised program being introduced.
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The image stuck in my head of Tea Party faithful in their medicare provided hoverrounds with signs emblazoned no socialism… like medicare.
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When you defund the IRS under the guise of “small government” it means that rich people with accountants and lawyers constructing complex tax dodges for them will very rarely get audited.
With their limited resources, the IRS will go after the Poors because they are easy pickings.
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Sadly not limited to just the IRS.
The head lawyer at DOJ after the housing bubble burst went on and on how it would be hard to prove a case against any of the banks, so they just didn’t bother.
I think he is happier in his new position at GoldmanSachs who he failed to punish.
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This won’t be an easy case.
Tens of millions use turbo tax to file federally, free of charge.
Many millions more have read the method to print to pdf the return info. Then simply copy/paste to a state issued form to file free there as well.
I’m not standing up for their practice; but it’s no worse than all the other things advertised with tiny can’t read white print.
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“it’s no worse than all the other things advertised with tiny can’t read white print”
Which is likely the main issue. If you don’t have anything dodgy going on, you don’t hide it in print that most people can’t read.
Legally it might be OK, but in my mind if the !tiny can’t read white print” exists at all, I’ll assume you’re not trustworthy.
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In general. And I use that word with intention.
The point here isn’t to ignore the less than honourable actions.
I simply point out the useless futility of going after them for their advertising. I can’t find anything that violates ‘truth in advertising’.
Even at the lowest level of criminal prosecution you’d have to show some level of fraud. The fact that so many millions file federal returns absolutely without fee kind of breaks the idea that this is fraud. And ‘truth in advertising’ doesn’t require communication of full TaC. Only that the statement be generally applicable.
I don’t see what can be done here the way law currently exists
'I earned one million, you fined me one thousand, what to do...'
Unless the financial penalty for a company screwing over the public is at a minimum 100% of the profit gained from doing so any penalties levied will just be rightly chalked up as costs of doing business no different than paying for electricity and just as likely to change the company’s behavior.
Cheers for the heads up.
Intuit advertise a product called QuickBooks on TV here in the UK. Anybody who expresses an interest in it, I’ll tell them to look for a better product, directing them to this article to find out the reason for my recommendation.
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Unless I’m mistaken (it’s been a long while since I lived there), the Intuit software in the UK is geared toward businesses whereas in the US it’s individuals due to to the difference in the need to self-report (which is usually just PAYE in the UK).
I certainly would still have issues trusting them, but since the average individual doesn’t need to file a tax return in the UK it’s a different kind of issue. But, yeah, if you know a supplier is fraudulent in one place, you shouldn’t trust them in another.
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“[I]f you know a supplier is fraudulent in one place, you shouldn’t trust them in another.”
Exactly my reasoning. I already knew that QuickBooks is geared towards businesses and not the ordinary consumer, and of course non-business owners here don’t file tax returns thanks to income tax being paid through the PAYE system and sales tax being paid through VAT (making kids pay tax), but as the moral in the modern rewrite of The Wolf and the Crane says, “If you rip people off even once, they will be reluctant to treat with you for a second time.”
How about FOIA?
The IRS already has software that can calculate one’s taxes. Were I American, I’d seriously consider sending them a FOIA request to get a copy. If the IRS developed it themselves, it’d even be public-domain. While I’ve never heard of anyone trying this with the IRS, people have done it to get useful software from other agencies.
(Or, the lazy solution: I’ve heard in many countries, one can just fill out the income and credit/deduction lines and leave the actual calculations to the tax authority’s computers. And that this usually meets the legal requirements—i.e., the laws require people to declare their income but not to do the tedious calculations.)
The IRS needs to go nuclear: a “compute my taxes” option offered by the IRS itself.
There are some things they can’t compute themselves because they aren’t reported, but the vast majority of cases, they can.
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Also because taxpayers often have a choice on when or how to report things. For example, one could hang onto medical receipts to make Health Savings Account withdrawals decades later; or, more commonly, one can choose from several methods to compute a cost basis for capital gains.
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“There are some things they can’t compute themselves because they aren’t reported”
I’d have thought that would be the point of auditing. Allow a standard automatic solution for most people (i.e. single income, single residence, single family), then require further filing if someone doesn’t meet those criteria and investigate fully if there’s evidence that they’re lying.
That is how it has happened in most places I’ve lived.
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If the employer knows one’s number of dependants, etc. (for deduction calculation), “further filing” could just mean checking a few boxes for deductions, giving the tax ID of any spouse, entering mortgage interest, etc. In any case, there’s little reason to have any humans do the calculations. The IRS could send a bill or refund after receiving the data.
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I’ll admit I’m not very familiar with exactly what needs to go into a US tax return. All I know is the UK system (largely PAYE, meaning that your employer files and deducts for you and you deal with council taxes, etc. separately, no tax return required unless you’re self employed, etc.), and the Spanish system (you file individual tax returns each year but so long as you don’t have income other than from what’s already recorded via your employer and property taxes, you just tick some boxes to confirm it’s correct).
Given the number of references I see to the IRS in popular US culture and the fact that so many people seem to depend on this kind of software to file tax returns, I’m assuming that it’s more complicated for many people there, but I apologise if that’s incorrect.
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The US tax system is huge & archaic, because tax prep companies donate a lot of money to keep it that way.
Once upon a time they used to aim to have taxes so someone with like an 8th grade education could finish the forms in 2 hours. (IIRC)
Now there are hundreds of little things that can make huge differences, mainly for the top earners but there are a tiny few nuggets for regular people that they can’t learn about without spending 3 months reading the tax code… or use the “free” filing option where they mention you might get more but you no longer qualify for the free product & we won’t tell you what else you could get until you pay us.
The truly insane thing is all of the documents mailed to citizens with information for their taxes, is also sent to the government so the government could just plug things in & send you a refund or a bill.
I mean they have all of our data & emails I’m sure they could do a much better job. There would be less time spent trying to audit people who made a math error or didn’t understand that the info on that form goes into this line not the other line and now you own $3200 due 6 weeks ago with daily interest running.
It would also cut out lots of lawyers and dodges used by the super wealthy… If someone worth 4 billion dollars pays 0 in taxes there is something horribly wrong in the system.
Thos is why shit is so broken in the US. Plenty of talk of holding the bad corporate actors accountable but nothing in the part of actually doing it.
It is a problem that will probably only be solved when CEO blood starts flowing like cheap beer due to people getting fed up with all the constant grift and start murdering them wholesale over the realization that its the only way to get justice at this point, by instilling the fear of death back into the rest if they dont curb their excessive greed.
Ask yourself: How many politicians hold intuit stock?
US taxes seem so bizarre to anyone in a PAYE country.
It’s like, you have two things, healthcare and getting your taxable income info to the government, and the US seemed to get it completely backwards as to which of these it should be your employer’s responsibility to provide…
This is not too surprising, actually. When I did my taxes- largely due to me contributing to my 401K that my employer matches 6%; I had to pay to upgrade to Turbotax Deluxe / Turbotax Live! in order to get the tax credits from my contributions. This is a very common tax deduction- that is utilized by millions of people.
Yes, Turbotax has gotten more expensive – at one point I was paying about $30 for filing – the state taxes, a few years ago. Now, this year it ran about $80-90 for filing both Federal and state taxes.
"Unlimited"
I believe precedent is that if you use the word falsely in advertising enough times, the advertising becomes true.