TurboTax to Pay $141 Million for Deceiving Consumers With Free Tax Services
If you got fooled into using TurboTax believing it was free, expect to receive some restitution.
TurboTax’s parent Intuit has agreed to a $141 million settlement for allegedly deceiving low-income consumers into paying for tax services that were originally advertised as free.
On Wednesday, New York Attorney General Letitia James announced the settlement, which will involve sending reimbursement checks to nearly 4.4 million consumers in the US. The company has also agreed to suspend TurboTax’s “free, free, free” ad campaign, which James said lured in customers with promises of free tax preparation services, only to push them into paying.
“For years, Intuit misled the most vulnerable among us to make a profit,” James said. “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.”
Intuit made the settlement following a multi-state investigation from US state prosecutors examining the company’s practices, including how TurboTax had a “freemium” tax-filing service called “TurboTax Free Edition.”
“In some ads, the company repeated the word ‘free’ dozens of times in as short as 30 seconds. However, the TurboTax ‘freemium’ product is only free for approximately one-third of US taxpayers,” the New York Attorney General's office said. In reality, the TurboTax Free Edition applied to “simple” tax returns covering people who only need to file a Form 1040. Other users needing to report other income could only use TurboTax if they paid to upgrade.
The multi-state investigation also found that Intuit allegedly tried to direct users to the freemium product over the IRS’s actual free tax-filing services by
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