As we posted in March, the FTC issued an administrative complaint against Intuit over the company's repeated use of the F-word in ads for TurboTax. No, not that F-word - the other one. In an initial decision, an Administrative Law Judge (or "ALJ") determined that Intuit's ads for "free" services were deceptive because most people would have to pay money to use them. The 237-page decision covers a lot of ground, but we're just going to focus on a few key points that are broadly relevant for most marketers.

Intuit ran a series of ads promoting TurboTax's free product. Some of those ads - like this one - consisted almost entirely of the word "free" spoken repeatedly. Although it's true that some consumers could file their taxes for free, most couldn't. For example, the FTC alleged that in 2020, approximately two-thirds of tax filers couldn't use TurboTax's free product. Moreover, the FTC alleged that many consumers only learned that they couldn't file for free after they had already started the TurboTax filing process.

Intuit argued that its ads disclosed that the free service was "for simple returns only" and that it told consumers to visit its website to "see if you qualify." The ALJ determined that the disclosures "were typically inconspicuous, unclear, or otherwise insufficient to inform a reasonable viewer of the terms of the offer or to modify the dominant message of 'free.'" For example, some disclosures appeared only for a "few seconds" in a "small font" that was "relatively faint in color" and were otherwise hard to read.

Intuit argued that pointing people to visit the website to "see if you qualify" was sufficient to point consumers to the limitations on the offer. The ALJ rejected that argument. In addition to its concerns about the clarity of the disclosure, the ALJ noted that "boilerplate" statements like those are "unlikely to alter the overall net impression of an advertisement." Moreover, "information available on Intuit's website cannot be used to counter or cure a false claim contained in other advertising."

Intuit argued that it had to point to the website because including all of the relevant disclosures in the ads would lead to "information overload" for consumers. That's a fair point, but the ALJ wasn't sympathetic, and proposed a different solution to the problem: "to the extent it is difficult for Intuit to communicate effectively all material eligibility requirements for Intuit's free tax filing products, the solution is to avoid claims that trigger the need for such clarifying disclosures."

By now, you may be using the other F-word and wondering how this analysis applies to your own marketing. Although companies can use clear disclosures to clarify claims, this decision demonstrates that there are limits to what disclosures can do, particularly if a claim would be misleading without the disclosures. Inuit announced that it will appeal the decision, so we haven't heard the last word on this yet. Nevertheless companies would be well-advised to review their disclosures practices in light of this decision (and other recent comments from the FTC about the limits of disclosures.)

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