Intuit in Hot Water with the FTC for misleading “free” claim

The Federal Trade Commission (FTC) recently alleged that Intuit/TurboTax engaged in misleading ads for claiming that they offer “free” tax-filing services with inadequate disclaimers. The company failed to explain how people can make “free” tax filings or even clarify that the “free” claim only applies to consumers who file “simple tax returns.”

The FTC said that Intuit’s disclaimers were:

— Inadequate because the “free” tax-filing service is limited to “simple tax returns” or “simple U.S. returns only;”
— Disproportionately small when compared to the prominent text emphasizing the “free” service;
— Appearing for just a few seconds, in writing only, not read by voiceover, and often in color similar to the background;
—With eligibility requirements hidden behind a hyperlink over the words “See why it’s free,” requiring consumers to click on the hyperlink to trigger a pop-up explaining the limitations; and
— Unfair because their website forced consumers to spend significant time and effort creating an account and inputting their sensitive personal and financial information before learning they were ineligible for the “free” service.

Intuit has already agreed to settle claims with the attorneys general for all 50 states and the District of Columbia for $141 million, requiring Intuit/TurboTax to cease its “free” advertising campaign.

The TurboTax case is a reminder that all advertising must be truthful and not misleading to consumers, and, more importantly, disclosures must be presented clearly and conspicuously. Disclosures cannot cure a false claim or provide information contradicting a material claim. Businesses should also avoid designing customer flows with dark patterns that hide or delay disclosure of material information (like fees!) or adopting bait-and-switch messaging to lead consumers to a more expensive outcome.

Contact Aspire Law today. We help businesses comply with advertising laws.