I think I understand the confusion. On the Kobo web page, there is a link to free e-books, but none of them are free.
http://www.kobobooks.com/lists/freee...ampaign=freeus When I sorted the list by price, not one book was free.
There are free books at the Kobo store, just do a search for a book and sort by price. For example, I searched for A Tale of Two Cities, and sorted by price from low to high, and there were several free versions. I have no idea why a link to free e-books would not have any free books, and I could see how that could be frustrating. There are other sources for legal free books, in addition to those already mentioned. Manybooks.net is one you might want to consider.
Or to find free e-books on the Kobo store, just don't click on the Free Books link. Just do a normal search. Say you're looking for free science fiction, you enter "science fiction" in the search box, and when you get the results, just sort by price from low to high. You will see a lot of free e-books.