Intuit, the company behind TurboTax, has reached a settlement to pay $141 million over misleading advertising.
Until 2021, Intuit offered two free versions of their tax-filing program, TurboTax. One was through the IRS’s Free File Program, aimed at middle-income taxpayers and military service members. The other was their heavily advertised commercial software, called “TurboTax Free Edition.” This later was free only to people with “simple returns,” but Intuit allegedly made it difficult to impossible to know if your tax return met their definition of “simple” until you were ready to file. Most users reached that point only to be surprised by a filing fee. They could back out at that point, but it meant beginning all over again in whatever their second choice of filing method was.
In 2019, a report by investigative newsroom ProPublica found that TurboTax was deceptively guiding tax filers through unnecessary complications in order to disqualify them for free filing. They were also using deceptive links to steer low-income filers away from other free services.
Documents obtained by ProPublica also imply that Intuit execs were fully aware of the “chance” that customers who qualified for free filing could be deceived into thinking they didn’t.
In the settlement agreement, Intuit admits no fault, but they agree to suspend all advertisement of their “free” service, and to pay restitution to 4.4 million qualified tax payers from 2016 through 2018. The restitution will amount to approximately $30 per filing.
“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,” said New York Attorney General Letitia James in a statement. “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”
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