Attorney General Schwalb Leads Coalition Urging Court to Uphold FTC's Ban on Deceptive TurboTax Advertising

Argues Intuit’s Marketing of TurboTax Harmed Millions of Consumers

 

District of Columbia Attorney General Brian L. Schwalb and Illinois Attorney General Kwame Raoul led a coalition of 22 state attorneys general in support of a Federal Trade Commission (FTC) order that bars Intuit, the maker of TurboTax, from deceptively advertising “free” tax preparation software when its services were not actually free for most consumers. In a brief filed in Intuit v. Federal Trade Commission, the attorneys general argue that the United States Court of Appeals for the Fifth Circuit should reject Intuit’s appeal of the FTC’s order. 

“Intuit misled taxpayers in DC and across the country with ads falsely claiming TurboTax was free,” said Attorney General Schwalb. “Preying upon low-income taxpayers and military families who were eligible to file their taxes at no cost, Intuit pocketed millions of dollars in profit. The FTC’s cease and desist order protects consumers from this type of unacceptable, illegal conduct.”

In 2022, a coalition of 50 States and the District of Columbia secured $141 million from Intuit as part of a settlement that resolved state investigations into claims that Intuit deceptively marketed and advertised TurboTax. In 2023, the FTC issued an order requiring Intuit to stop advertising products as “free” unless they are free to all consumers. Intuit appealed and is seeking to overturn the FTC’s cease and desist order.

In the brief, the coalition of attorneys general argues that the Fifth Circuit should uphold the FTC’s order against Intuit because:

  • Intuit harmed millions of Americans: The brief describes how Intuit manipulated search results to lure consumers into paying for tax prep software even if they were eligible to file their taxes for free as part of a program for active-duty servicemembers, veterans, or low-income taxpayers. Intuit made millions of dollars in profits from low-income taxpayers and military families who would have been eligible to file their taxes for free but who instead paid Intuit to file taxes. Intuit also deceived millions of consumers by running a multi-year nationwide advertising campaign that repeatedly and falsely depicted TurboTax as free when it was not free for the majority of consumers.
     
  • The FTC correctly applied rules protecting consumers: Intuit claimed that the FTC made legal errors when applying rules against deceptive business practices. The attorneys general refute these claims, arguing that the FTC correctly applied basic principles of consumer protection law, and that Intuit’s repeated claims to offer “free” service when it was not free to most consumers was deceptive. The attorneys general also argue that the FTC correctly applied a rule banning businesses from luring consumers with deceptive claims, and that the rule applies to all transactions—including those that take place online.
     
  • State and federal consumer protection enforcers each have a role to play: Intuit claimed that the FTC’s order should be overturned because it is unnecessary in light of the settlement Intuit reached with the states. The coalition points out that the FTC’s order does not duplicate the settlement with the states—it is different in certain ways. For instance, the order bars Intuit from engaging in a wide range of misleading practices and requires Intuit to use specific language in ads to ensure consumers are informed that free service is available only for a small group of taxpayers. Additionally, even if there are similarities between the orders, the attorneys general point out that state and federal consumer protection mechanisms are designed to be complementary, and it is very common for a business that misleads and deceives Americans to face consumer protection enforcement from the federal government and the states.

A copy of the brief is available here.  

District of Columbia Attorney General Schwalb and Illinois Attorney General Raoul were joined in filing this brief by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Washington, and Wisconsin.

Appellate Litigation Fellow Elissa Lowenthal, Principal Deputy Solicitor General Ashwin Phatak, and Solicitor General Caroline Van Zile handled this matter for the Office of the Attorney General for the District of Columbia.