Intuit Beats FTC in Court: 5th Circuit Ends Restrictions on 'Free' TurboTax Advertising

Intuit Beats FTC in Court: 5th Circuit Ends Restrictions on 'Free' TurboTax Advertising

The 5th Circuit Court of Appeals has ruled that the FTC cannot enforce its deceptive advertising restrictions against Intuit's TurboTax, citing the Supreme Court's Jarkesy decision to hold that the FTC's claims involve private rights requiring Article III court adjudication rather than administrative proceedings.

The Ruling

The 5th Circuit held that:

• Deceptive advertising claims are "traditional actions at law and equity"
• Private rights: These involve private rights that demand adjudication in Article III courts
• FTC overreach: Section 5 of the FTC Act did not create a new duty against deceptive advertising
• Historical precedent: That duty "long predated the FTC Act" and was enforceable through common law

The Jarkesy Precedent

The Supreme Court's 2023 Jarkesy decision is reshaping federal agency power:

• Private vs. public rights: Matters concerning private rights cannot be adjudicated by administrative agencies
• Court requirement: If a suit is "in the nature of an action at common law," Article III court adjudication is mandatory
• Public rights exception: Limited to revenue collection, customs, immigration, Indian affairs, public lands, and public benefits

Ripple Effects

The same Jarkesy logic is now threatening other agencies:

• FCC fines at risk: AT&T, Verizon, and T-Mobile are challenging FCC's authority to fine carriers for selling customer location data
• Supreme Court case: The carriers' case will be decided by the Supreme Court this term
• FCC's position: Chairman Brendan Carr (who voted against the penalties) is urging the Court to uphold FCC's fine authority
• Stakes: "Eliminating [forfeitures] could mean that many vital rules—such as those protecting privacy, combating robocalls, and regulating broadcasting—go effectively unenforced"

Why It Matters

This ruling significantly limits the FTC's ability to police deceptive advertising:

1. TurboTax misleading ads: Intuit previously agreed to restrictions after FTC found its "free" TurboTax advertising was deceptive
2. Future enforcement: FTC will need to bring cases in federal court rather than through administrative proceedings
3. Agency power: Part of broader trend of courts limiting federal agency enforcement authority

Source: Ars Technica | 5th Circuit Court of Appeals