Judge Won’t Halt ‘Free TurboTax’ Ads, Denies FTC Bid for ‘Emergency Relief’

Judge Charles Breyer’s ruling with his official portrait (inset) painted by Scott Wallace Johnston.

Score one for San Diego’s TurboTax.

US District Judge Charles Breyer on Friday rejected a Federal Trade Commission request to block Intuit from further advertising its TurboTax Free Edition, which the agency labeled deceptive and harmful to consumers.

Judge Breyer’s order denying FTC motion, plus FTC briefs on keeping exhibits unsealed. (PDF)

A day after hearing arguments on the popular software, Breyer denied the FTC’s motion for emergency relief – a preliminary injunction or temporary restraining order against Intuit of Mountain View.

In a statement, Intuit told the Times of San Diego it was pleased with the court’s order.

“We are clear and fair with our customers and open and transparent about our advertising practices,” Intuit said through a spokesman. “Moreover, our commitment to free tax preparation has led to approximately 14 million taxpayers using TurboTax Free Edition to file their taxes for free every year. We are confident in the merits of our position and will continue vigorously defending against the FTC’s claims. “

FTC representatives did not immediately respond to a request for comment.

The San Francisco-based Breyer has said he wasn’t taking sides on whether the free edition of TurboTax is, in fact, an effort to “snooker” millions of consumers.

He gave these reasons for his ruling:

  • Tax Day has passed, so “most taxpayers have already filed their taxes. Intuit represented in its briefing and at oral argument that its advertising is largely done for this tax season. Any prospective harm is therefore attenuated. “
  • Even before Tax Day, “Intuit had removed several of the most plausibly deceptive advertisements – that is, three videos that repeated the word ‘free’ a dozen or more times over 30 seconds before a very brief disclaimer.”
  • To the extent other advertisements might violate the FTC Act, the Court notes that the FTC has brought an administrative proceeding against Intuit, with a hearing set for September 14, 2022. “

Breyer said an administrative law judge expert in these matters will hear (and likely rule) before Intuit resumes its advertising campaign in the lead-up to Tax Day 2023.

But the 80-year-old younger brother of retiring Supreme Court Justice Stephen Breyer warned Intuit that if it resumes its full advertising campaign before the administrative law judge releases her report, “or the facts on the ground change significantly,” the FTC may return to him to request relief.

Also Friday, Intuit and FTC lawyers filed dueling briefs over whether certain exhibits turned up in the FTC investigation of the alleged TurboTax bait-and-switch strategy should be made public.

They disagree over the number of exhibits subject to seal. Intuit wants to “strike” 136 exhibits.

But the FTC said Intuit actually seeks to strike fewer than three dozen.

“As a result of this oversight, several of Intuit’s assertions about the documents filed by the FTC are incorrect,” wrote Rebecca Plett for the FTC. “For example, counsel did not present a ‘true and correct list of the 136 exhibits filed by the FTC that are not cited in the TRO Motion or its supporting declarations.'”

She said the FTC alerted Intuit lawyers of the error on Tuesday, but “as of this filing and to the FTC’s knowledge, Intuit has yet to retract or correct its incorrect statements.”

Intuit said in an earlier brief that many of the exhibits filed with the FTC’s March 28 TRO motion include “highly sensitive and proprietary information regarding Intuit’s operation. Disclosing such information would allow Intuit’s competitors to gain key insights into Intuit’s internal business strategy and would cause the company competitive and financial harm. “

The FTC also argued against Intuit’s argument that exhibits are not relevant because they are not cited by the FTC in its now-rejected motion to halt the ads.

“The FTC disagrees,” Plett said. “The exhibits are clearly factually relevant. Though the FTC did not cite to each investigational hearing transcript in its Motion for TRO and PI, even the transcripts were not cited are relevant to the merits of the case. “

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