Payment Terms

Intuit to pay $141 million settlement for ‘free’ TurboTax ads

NEW YORK — The company behind the TurboTax tax-filing program will pay $141 million to customers across the United States who were tricked by deceptive promises of free tax-filing services, the prosecutor announced Wednesday. general of New York.

Under the terms of a settlement signed by attorneys general in all 50 states, Mountain View, Calif.-based Intuit Inc. will suspend TurboTax’s “free, free, free” advertising campaign and pay restitution to nearly $4,000,000. 4 million taxpayers, the New York attorney general said. said Letitia James.

James said his investigation of Intuit was sparked by a 2019 ProPublica report that found the company used deceptive tactics to steer low-income filers away from the free federally-backed services they qualified for — and toward its own commercial products, instead.

“For years, Intuit has deceived the most vulnerable among us to make a profit. Today, every state in the country is holding Intuit accountable for defrauding millions of taxpayers, and we’re putting millions back in their pockets. Americans affected,” James said in a statement. “This agreement should remind businesses large and small that engaging in these deceptive marketing schemes is illegal.”

“As part of the settlement, Intuit has admitted no wrongdoing, has agreed to pay $141 million to put this matter behind it, and has made certain commitments regarding its advertising practices,” representatives from Intuit said Wednesday. Intuit in a blog post. “Intuit already adheres to most of these advertising practices and expects minimal impact to its business from implementing the remaining changes in the future.”

Until last year, Intuit offered two free versions of TurboTax. One was his participation in the Internal Revenue Service’s free file program, for taxpayers earning around $34,000 and members of the military. Intuit pulled out of the program in July 2021, saying in a blog post that the company could offer more benefits without program limitations.

The company also offers a commercial product called “TurboTax Free Edition” which is only intended for taxpayers with “simple returns”, as defined by Intuit.

According to documents obtained by ProPublica, Intuit executives knew they were misleading customers by advertising free services that weren’t actually free for everyone.

“The website lists Free, Free, Free and customers assume their return will be free,” said an internal company PowerPoint presentation. “Customers get angry”

Under the agreement, Intuit will provide compensation to consumers who started using the TurboTax Free Commercial Edition for the 2016 through 2018 tax years and were told they had to pay to file their tax return even if they didn’t. they were eligible for the version of TurboTax offered under the IRS. Free file program.

Consumers should receive a direct payment of about $30 for each year they were tricked into paying for deposit services, James said. They will automatically receive notices and checks in the mail.

“We empower our customers to take control of their financial lives, which includes being in charge of their own tax preparation,” an Intuit spokesperson told ProPublica in a statement. 2019.

The spokesperson added that a “government-run pre-filled tax preparation system that makes the tax collector (who is also the investigator, auditor and executor) the tax preparer is fraught with conflict. of interest”.