Intuit Inc. agreed Wednesday to change statements in an ongoing advertising campaign for its popular tax-preparation software TurboTax that competitor H&R Block Inc. said was misleading.
H&R Block, the nation’s largest tax preparer, sued Mountain View, Calif.-based Intuit last week in federal court in Kansas City, seeking to put an end to radio and television ads airing since Jan. 9.
The ads claimed that “more returns were prepared with TurboTax last year than at all the H&R Block stores combined.” Kansas City-based H&R Block, which makes its own software called TaxCut, said in its court filing that its stores prepared more than 26 million returns last year while taxpayers used TurboTax to prepare 21 million returns.
In an order Wednesday putting Intuit’s agreement in writing, U.S. District Judge Scott Wright said Intuit “disputes the validity of the number of tax returns identified by” H&R Block but agreed to pull the ads’ voiceover soundtrack anyway.
The order goes into effect Friday and extends through April 30.
“We feel it’s in Intuit’s best interest to reach this agreement rather than fight this in a long battle in the courts,” said Intuit spokesman Rob Lanesey, adding that the court didn’t rule there was wrongdoing. “We’re very happy with the TurboTax advertising campaign and are happy with this agreement.”
H&R Block officials said they also were pleased with the outcome.
“It’s common for smaller businesses to target an industry leader such as H&R Block in their advertising claims,” said Tim Gokey, president of H&R Block’s tax services division, in a written statement. “However, claims must be substantiated.”
In its original lawsuit, H&R Block also disputed statements in the ads such as: “TurboTax asks me questions just like H&R Block does.” H&R Block said programmed computer responses were not equal to interaction with trained tax preparers.
H&R Block spokeswoman Linda McDougall said the company was considering whether to continue litigating that part of the lawsuit. The company also plans to continue pursuing damages and a permanent restraining order on Intuit’s advertising “so we don’t have other companies making similar claims in the future,” McDougall said.
H&R Block said it filed its lawsuit after Intuit ignored a cease-and-desist letter calling for it to stop the advertisements.
The day before, Intuit asked a federal court in California for a declaration that its advertising did not violate state or federal law. Company attorneys initially tried to have the case dismissed or transferred to California.