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Tax season is just around the corner, and many consumers will turn to Intuit’s popular TurboTax software to prepare and file their own taxes. A federal class action lawsuit filed in California may have these consumers thinking twice, however, claiming Intuit charges users for its so-called “free” online edition of TurboTax, and charges illegal and exorbitant fees to those who elect to defer their TurboTax fees to be taken out of their tax refund.According to the TurboTax class action lawsuit, customers visiting the TurboTax webpage are presented with various TurboTax Online products, including the “Free Edition.”
However, “the poorly named TurboTax Online ‘Free Edition’ is not free, for it requires additional fees (typically $19.95) to file a state return. According to Defendant’s website, ‘TurboTax Online is free until you decide to file, e-file or print your return.’ At that point, consumers must ‘purchase [the] TurboTax Online federal and state products,’” the TurboTax class action lawsuit states.
While Intuit prominently displays and aggressively markets its not-free “Free Edition,” it conceals from plain view what it calls its “Freedom Edition,” which provides actual free e-filing for both federal and state tax returns, the class action lawsuit says.
The TurboTax class action lawsuit also claims Intuit violates the Truth in Lending Act and California business and usury laws by charging “usurious,” “quadruple-digit interest rates” as fees for deferring payment to be taken out of users’ tax refunds. The class action lawsuit also claims Intuit violates federal and California law by not accurately disclosing the interest rates and finance charges for deferring payment of tax preparation fees.
For example, lead Plaintiffs Tasha and Fredierick Smith claim in the class action lawsuit that they used TurboTax’s online software in 2009, 2010 and 2011. Each time they deferred paying the $89.90 fee to use the software, and chose to have it deducted from their tax refund.
Intuit charged them another $29.95 to do this, more than 34 percent of the $89.90 fee, the Smiths claim. They received their refund from the IRS two weeks later, which means they “paid $29.95 for an approximate 14-day loan of $89.90,” the class action lawsuit states.
“The APR, properly calculated in accordance with TILA, was an exorbitant quadruple-digit interest rate. Such interest rates also violate California’s usury laws.”
The Intuit class action lawsuit is brought on behalf of all U.S. citizens who, after January 12, 2008, used TurboTax Online and received a Refund Processing Option payment facilitated by Intuit and Intuit’s fees were deducted from the deposit account established for the Refund Processing Option payment. It is seeking statutory damages, restitution, compensatory and treble damages, and injunctive relief.
A copy of the Intuit TurboTax Class Action Lawsuit can be read here.
The case is Smith v. Intuit, Inc., Case No. 12-cv-00222, U.S. District Court, Northern District of California.
UPDATE 1: A class action settlement has been reached! Learn how to file a claim for the Intuit TurboTax Class Action Lawsuit Settlement.
UPDATE 2: A federal judge granted final approval to the Intuit TurboTax Class Action Lawsuit Settlement on October 1, 2013.
Update 4/24/14: Some Top Class Actions viewers have reported they received the following update from Heffler Claims Group, the Settlement Administrator for the TurboTax class action settlement: “We are currently in the process of reviewing over 360,000 filed claims. Your patience during this process is appreciated. Checks will be mailed out upon completion of the claims review process.The amount that each claim will receive via the settlement fund has not yet been determined. This determination usually occurs once all claims have been finalized.At this time, we have no set date for fund disbursement, but we are anticipating checks to go out soon after the claims review process is completed. Please feel free to get back to us in the future.” More info: www.turbotaxclassaction.com
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103 thoughts onIntuit TurboTax Class Action Lawsuit
I signed up and got the email and clicked the link and nothing happened what do i do now
You can do federal for free with Turbotax. I’ve done it three years in a row. You have to be careful however because there are certain screens where you have to make sure you re-select the “free” option or you will end up paying a fee because you clicked on an upgraded product choice. I have to say though that they efiled my return quickly and my refund got put onto my prepaid turbotax visa in full all 3 years without delay.
I paid $40.00 to file my taxes and kept rejecting them I only filed through them because it said free I live in new york State how do I join the lawsuit? I have to print them out and send them in so I couldn’t even e file and was charged!! Please let me know what my options are.
I filed and I had to pay 19.95 to file my 1040a
I, too, would like to get in on this lawsuit. I was pretty angry to find out I was paying for the “free” version of this software unless I wanted to start the whole process over again.
I had to pay too, $113 each year. I wondered why it said free?? I wont be using it next year.
I just did my sister’s taxes online and had to pay. How do I join this lawsuit? I have been using Turbo Tax for about 5 years.
I also would like to know how to join.
I paid for my TurboTax, and it was supposed to include one free filing. I was charged for filing, in addition to paying for the software.
The time has passed to add yourself to this claim…
Please email me if you know how I can delete a post from the Turbo Tax class action suit. As I response, I submitted information that I did not know I was going to be publicly posted. I recently received a phone call from a lady advising that my information was publicly posted. Ever since then, I have tried various sources to delete the post, with no avail.
So, how does one join in on this lawsuit? Am I missing the link somewhere? I just filed our “free” taxes last night for $21.25. I’d like my $ back for the past 3 years we’ve used this program! Yes, I’ve used it in the past, and knew they would charge me after the 1st time, but no other tax program I’ve used can measure up to turbotax.
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