Intuit (INTU), the owner of TurboTax, has been ordered to pay $141 million in restitution to millions of consumers who were deceived into paying for tax services that should have been free.
The settlement was announced Wednesday by New York Attorney General Letitia James.
“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said. “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 settlement also forces Intuit to suspend its TurboTax’s “free, free, free” ad campaign, which the Office of the Attorney General said, “lured customers with promises of free tax services, only to deceive them into paying.”
The settlement is in effect in all 50 states and the District of Columbia and impacts about 4.4 million consumers that used the company’s TurboTax Free Edition for the tax years 2016 through 2018 but were eligible for the IRS Free File program offered through TurboTax.
Affected consumers will receive a payment of about $30 for each year they were deceived, the AOG said. Automatic notices and a check by mail will automatically be sent to those impacted by the case.
An investigation into Intuit was started after ProPublica reported in October 2019 that it was using “deceptive digital tactics” to push low-income consumers into using its commercial tax filing products and away from free federally-support tax services.
Intuit was accused of aggressively marketing its TurboTax Free Edition as a “freemium” product, which in realization, is only free for about one-third of taxpayers, the Office of the Attorney General said.
Through its investigation, OAG found that the company engaged in “several deceptive and unfair trade practices,” including using similar names for its IRS Free File Product and its commercial paid product.
Intuit also bid on paid search ads to direct consumers to its “freemium” product and purposefully blocked the IRS Free File landing page from search engine results throughout the 2019 tax filing season, the OAG said.
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