PHOENIX – Attorney General Kris Mayes this week joined a coalition of 22 attorneys general in filing a brief supporting 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 an appeal filed by Intuit and uphold the FTC’s order.
"Intuit's deceptive practices have harmed millions of consumers, particularly low-income families and members of the military who were misled into paying for services that should have been free,” said Attorney General Mayes. “Upholding the FTC’s order is essential to protecting Arizonans and ensuring that companies are held accountable for false advertising."
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 Commission issued an order requiring Intuit to stop advertising products as “free” unless they are free to all consumers. Intuit has appealed and is seeking to overturn the FTC’s cease-and-desist order.
In the brief, the coalition of attorneys general argues that the court 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 clearly 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 argues that this is clearly incorrect. 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 orders, state and federal consumer protection mechanisms are designed to be complementary, making it common for businesses misleading Americans face enforcement from both levels.
A copy of the brief is available here.
Attorney General Mayes joined a coalition led by District of Columbia Attorney General Schwalb and Illinois Attorney General Raoul. They were also joined by attorneys general from California, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts Michigan Minnesota Nevada New Jersey New York North Carolina Oregon Pennsylvania Rhode Island Washington Wisconsin.