Intuit beats FTC in court, ending restrictions on "free" TurboTax ads

Intuit scored a significant legal victory as the U.S. Court of Appeals for the 5th Circuit unanimously invalidated the Federal Trade Commission's administrative action against the company's 'free' TurboTax advertising. The three-judge panel, citing the Supreme Court's June 2024 ruling in SEC v. Jarkesy, held that the FTC's use of an administrative law judge to adjudicate the deceptive advertising claims violated the constitutional separation of powers. The court vacated the FTC's 2024 cease-and-desist order, which had alleged Intuit's ads were deceptive because TurboTax's 'Free Edition' was unavailable to approximately two-thirds of taxpayers. While the court declined Intuit's request to dismiss the case entirely, it ordered the FTC to pursue its claims in federal court, where the standard of proof may be elevated and the scope of any potential order reconsidered.

The ruling comes amid a shifting regulatory landscape. The FTC is now led by Chairman Andrew Ferguson under the Trump administration, which has taken a different stance on administrative enforcement. The court's decision acknowledged that most American taxpayers do not have 'simple tax returns' qualifying for the free version, noting Intuit's website prompts users with complex returns to upgrade before filing. Intuit, which called the FTC allegations 'meritless,' had previously settled with all 50 states in 2022 for $141 million over similar advertising claims. This appeals court decision represents a procedural setback for the FTC's enforcement strategy and a validation of Intuit's legal position, though the substantive claims about its advertising practices remain to be litigated in a new forum.