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Blumenthal Urges FTC to Protect Consumers from TurboTax's Excessive & Deceptive Junk Fees

TurboTax is advertised as “free” to use, often misleads consumers into paying higher fees for services

[HARTFORD, CT] – In a new letter, U.S. Senator Richard Blumenthal (D-CT) called on the Federal Trade Commission (FTC) to continue strong oversight of Intuit, Inc., the maker of popular tax preparation software TurboTax. Blumenthal urges the FTC to protect consumers and crack down on Intuit’s deceptive advertisements and rampant use of junk fees.

“Intuit has been hoodwinking taxpayers into paying for tax services that they advertise as free. The FTC has cited them for it – they are falsely and deceptively luring taxpayers into their services and charging them for it after promoting their services as free,” said Blumenthal on Tuesday at a press conference at United Way of Connecticut in Rocky Hill. “It’s deceptive and misleading. That’s why I am calling on the Federal Trade Commission to protect taxpayers with stronger enforcement of laws against deceptive and misleading advertising – exactly what TurboTax is doing.”

TurboTax has long piled unfair junk fees onto consumers despite advertising that its products are “free” to use. Intuit has also tricked low-income Americans who are eligible for free filing services into paying for its company’s products, which resulted in a $141 million nationwide legal settlement in 2022. According to the Internal Revenue Service, Americans spend on average, nine hours and $150 to file their taxes because of the fees charged by Intuit and others.

Earlier this year, Blumenthal also joined Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) and U.S. Representative Katie Porter (D-CA) in sending a letter to Intuit, requesting a full accounting of the expenses underlying the company’s massive federal research tax breaks. The lawmakers’ request followed Intuit’s recent disclosure that it received $94 million in federal research tax credits in 2022, while simultaneously spending millions lobbying against the establishment of  a free program for Americans to file their taxes online.

Video of Blumenthal’s remarks in Rocky Hill can be found here. The text of Blumenthal’s letter to the FTC is available below.

April 19, 2024

Dear Chair Khan,

            I write regarding Intuit, Inc.’s (Intuit’s) continued deceptive and abusive practices that demand the Federal Trade Commission’s (FTC’s) sustained oversight. I strongly urge the FTC to take more aggressive action to protect consumers as current efforts have failed to stop these illegal practices. 

            Intuit’s practices during this tax season were no different than in the past; Intuit has continued to mislead consumers into paying for services when they qualified for free filing options or steered consumers into paying higher fees than what the consumers understood to be the charges when they signed up for Intuit services. 

            The FTC previously determined that Intuit engaged in a campaign of deceptive practices when it ran ads claiming that Intuit’s services were “free” despite that not being true for millions of taxpayers. In 2022, Intuit agreed to a settlement of $141 million for engaging in these practices where low-income Americans, who were eligible for free filing services, instead were deceived and tricked into paying for the company’s tax filing software. 

            I support the recent action taken by the FTC against Intuit, including the issuing of an administrative complaint against the company for deceiving consumers with false advertising claims of “free” tax filing. Additionally, I commend the FTC for taking the additional action of filing a district court complaint asking a court to order Intuit to halt its deceptive advertising immediately. 

            Despite these actions, Intuit has continued to engage in deceptive and abusive practices that are costing Americans millions of dollars. Intuit’s TurboTax website pushes taxpayers into choosing preparation options that are at a higher cost than the customer needs and continuously upsells these products throughout the tax filing process. Additionally, steps that could have lowered the tax preparation cost were hidden behind additional barriers. 

            Americans should have the option to prepare and file their taxes directly with the U.S. government using a free tax filing software. I applaud the IRS for launching its first 12 state Direct File pilot, a new service that allows some Americans in select states to file their tax returns for free and directly with the IRS.

            Until a simple, free Direct File program is available to all Americans, continued aggressive and timely oversight of Intuit and tax preparation companies and immediate administrative and judicial enforcement action is critically necessary to protect Americans and stop Intuit’s fraudulent behavior. 

Thank you for your attention to this matter.