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

In a significant legal victory, Intuit has successfully challenged the Federal Trade Commission (FTC) over allegations of misleading advertising related to its TurboTax software. An appeals court recently overturned the FTC's 2024 ruling, which accused the company of violating U.S. law by misleading consumers with claims that TurboTax could be used for free. The initial allegations stemmed from a determination made by the FTC under the leadership of Lina Khan, which found that two-thirds of taxpayers could not actually file their taxes free of charge, as Intuit's ads suggested. The FTC's chief administrative law judge supported this view, asserting that Intuit's advertising was deceptive. However, the 5th Circuit Court of Appeals delivered a unanimous 3-0 ruling that favored Intuit. The judges concluded that the FTC's method of adjudicating such claims through administrative law judges infringed upon the constitutional separation of powers. They referenced a recent Supreme Court ruling in *SEC v. Jarkesy*, which determined that the SEC's processes for imposing fines violated the right to a jury trial. This ruling clarifies that the FTC must bring deceptive advertising cases before federal courts rather than relying solely on its own administrative framework. Circuit Judge Edith Jones articulated that while the FTC's enforcement action must continue, it should do so in a federal court setting. She noted that the requirements for proving such claims may become stricter, and the agency must provide justification for any orders it issues, especially since Intuit stopped the contested advertisements years ago. With the regulatory landscape shifting under the Trump administration, Intuit now finds itself in a more favorable position, having seen the removal of Democratic FTC members. The court's decision not only strengthens Intuit's stance but also raises questions about the future enforcement of advertising regulations by the FTC.