U.S. Appeals Court Strikes Down FTC Order Against TurboTax "Free" Advertising

A federal appeals court has overturned a Federal Trade Commission ruling that had barred Intuit, the company behind TurboTax, from marketing its tax preparation software as "free" to consumers who were actually ineligible for the no-cost option. The unanimous 3-0 decision from the 5th U.S. Circuit Court of Appeals in New Orleans marks a significant legal victory for the Silicon Valley-based company.

The court ruled that allowing an FTC administrative law judge to adjudicate deceptive advertising claims was unconstitutional, citing a violation of the separation of powers. The ruling referenced a landmark 2024 U.S. Supreme Court decision that similarly restricted the Securities and Exchange Commission from using in-house judges to enforce securities laws.

The now-overturned FTC order, issued in January 2024, had stemmed from a years-long dispute over Intuit's marketing practices. The agency accused the company of misleading consumers for six years by broadly promoting TurboTax as free — with some advertisements reportedly repeating the word "free" multiple times — despite the offer applying only to taxpayers with straightforward returns. The FTC described the nature of Intuit's conduct as egregious and had demanded the company clearly disclose what share of users actually qualified for the free tier.

Writing for the court, Circuit Judge Edith Jones clarified that the FTC must now bring deceptive advertising claims through the federal court system, where the agency could face a stricter standard of proof. However, she stopped short of dismissing the case entirely, sending the matter back to the FTC for further review.

The FTC did not issue an immediate comment. Intuit's general counsel maintained the agency's allegations were without merit, reaffirming that the company has consistently been transparent with its customers throughout the process.