Intuit settles over Free File controversy

Intuit, the company behind products like TurboTax, has agreed to settle with 50 state attorneys general, plus the District of Columbia's, over accusations that it exaggerated just how free its Free File program actually was.

In late March, the Federal Trade Commission filed a complaint with the U.S. District Court for Northern California, accusing the company of overstating the its Free File option to the point where the FTC considers such marketing a deceptive trade practice. The FTC said the program only applied to a minority of customers despite widespread marketing of the option. While the commercials have a disclaimer saying the free option is only for simple returns, the FTC did not think these were adequate due to their small size, the short amount of time they’re on the screen, and the fact that voiceovers don’t mention them. Further, it said that the definition of a “simple” return has narrowed over the years.

Intuit, at the time, had vowed to fight the charges, saying they had no merit at all, and noting that the company has helped nearly 100 million Americans file their taxes for free.

The company agreed to settle the charges in order to put the matter behind it, and has agreed to pay $141 million and to follow certain commitments regarding its advertising practices, the majority of which Intuit said it already complies with. The settlement also saw the company not admit any wrongdoing.

“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” said executive vice president and general counsel Kerry McLean, in a statement. “Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last eight years — more than all other tax prep software companies combined. In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country.”