Intuit To Pay $141M Settlement Over “Free” Turbo Tax Ads

The New York Attorney General, Letitia James, announced a record multistate agreement with the owner of TurboTax, Intuit Inc. (Intuit), for deceiving millions of low-income Americans into paying for tax services that should have been free.

The press release continues: As a result of Attorney General James’ agreement, Intuit will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged. In addition, Intuit must suspend TurboTax’s “free free free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying.

All 50 states and the District of Columbia have signed on to the agreement. New York will receive more than $5.4 million for the 176,000 New Yorkers who were tricked into paying to file their federal tax return.

According to New York Attorney General Letitia James, “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to. For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal. New Yorkers can count on my office to protect their wallets from white-collar scammers”.

According to ArsTechnica, Intuit “used confusingly similar names for both its IRS Free File product and its commercial “freemium product”, ran search ads “to direct consumers who were looking IRS Free File service to the TurboTax ‘freemium’ product instead,” and “purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season”, the settlement announcement said.

The Associated Press reported that until last year, Intuit offered two free versions of TurboTax. One was through its participation in the Internal Revenue Service’s Free File Program, geared toward taxpayers earning roughly $34,000 and members of the military. Intuit withdrew from the program in July 2021, saying in a blog post that the company could provide more benefits without the program’s limitations.

Considering all of this, it appears that Intuit was hoping to provide more “benefits” to the company itself. They got greedy, and appear to have intentionally hidden the IRS Free File away from people – who were tricked into believing Intuit’s version was also free. And now, Intuit is paying for it.

The press release from the New York Attorney General’s Office states: Under the agreement, Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax.

Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will receive notices and a check by mail.