Millions of TurboTax users were deceived by ads, officials say. Now company will pay
The parent company of TurboTax will pay $141 million in restitution to millions of customers across the United States who were deceived into paying for tax-filing services advertised as free, according to authorities.
All 50 states have signed an agreement with Intuit Inc., TurboTax’s parent company, mandating it suspend its “free, free, free” advertising campaign that misled millions of customers, New York Attorney General Letitia James said in a May 4 release.
In addition, the company will repay $141 million to the approximately 4.4 million customers who started using TurboTax’s “Free Edition” between the tax years of 2016 and 2018.
The settlement applies to customers “told that they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax,” James said.
Customers can expect to receive a payment of about $30 for each year they were misled into paying for the filing services.
Intuit did not immediately respond to a request for comment from McClatchy News on May 4.
The Federal Trade Commission filed a federal complaint against Intuit. Inc on March 28, accusing the company of deceptive advertising, as reported by McClatchy News.
“TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with charges when it’s time to file,” Samuel Levine, director of the Bureau of Consumer Protection, said in a March 29 news release. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”
Intuit said it would “vigorously challenge” the FTC’s complaint in a March 28 statement.
“The FTC’s arguments are simply not credible. Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep,” Kerry McLean, executive vice president and general counsel of Intuit, said in the statement.
According to the FTC’s complaint, about two-thirds of people who filed taxes couldn’t use the company’s free product in 2020, according to reporting by McClatchy News. Yet, TurboTax continued to present its services as free in television commercials and online.
An investigation from the New York Office of the Attorney General found that Intuit also engaged in “several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program,” the release stated.
“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in the release. “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.”
The company agreed to reform several other business practices, such as:
- “Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
- Enhancing disclosures in its advertising and marketing of free products;
- Designing its products to better inform users whether they will be eligible to file their taxes for free; and
- Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.”
Consumers impacted by this settlement will receive notices and a check in the mail, according to the release.
This story was originally published May 4, 2022 at 1:34 PM with the headline "Millions of TurboTax users were deceived by ads, officials say. Now company will pay."
