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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
WHENCAN WE EXPECT PAYMENTS, AND IS IT AN EQUAL AMOUNT FOR ALL?
Contact Heffler Group at 215-665-8870.
SETTLEMENT FUND
44.
Establishment of Fund
a.
Within thirty (30) days
of Preliminary Approval of the Settlement
Agreement, Intuit shall pay the total sum of Six Million Five Hundred and
Fifty Thousand Dollars ($6,550,000.00) to create a Settlement Fund.
Provided that this Agreement is finally approved by the Court without
material change, amendment or modification, the Settlement Fund will be
used to satisfy Approved Claims for Settlement Class Members in
exchange for a mutual release and covenants set forth in this Agreement,
including, without limitation, a full, fair and
complete release of all claims
and obligations, and dismissal of the Litigation with prejudice.
b.
If the Settlement Agreement is not finally approved, the Settlement Fund
belongs to
Intuit
, less any Administrative Expenses paid to date
.
Plaintiffs
shall
have no financial responsibility for any Administrative Expenses
paid out of the Settlement Fund in the event that the Settlement Agreement
is not finally approved.
c.
The Settlement Fund shall be used to pay (i)
Settlement Class Members’
benefits; (ii)
service awards to the Plaintiffs; (iii) attorneys’ fees, costs,
and expenses of Class Counsel; and (iv) costs of administration of the
Agreement, including without limitation paym
ent of Administrative
Expenses
.
d.
Any award of attorneys’ fees, administrati
ve costs, or any other fees,
costs, or benefits otherwise awarded in connection with the Settlement
Agreement shall be payable solely out of the Settlement Fund.
e.
Intuit’s contribution to the Settlement Fund shall be fixed under this
Section and be final.
Intuit shall have no obligation to make further
payments into the Settlement Fund, and shall have no financial
responsibility or obligation relating to the settlement beyond the
Settlement Fu
when will we be receiving settlemet payment
does anyone know the range of how many people that submitted a claim&the range of how much we are looking at getting back in a fefund?
So when will the checks be sent out?
i SIGNED UP
I found out about the lawsuit via an email from “TurboTax Class Action Settlement Administrator .” The email had links to everything you need to know/do, is applicable. Maybe check all of your email accounts and spam folders. You may find the information there.
I was a little happy to hear about the lawsuit, as I’ve been using Turbo Tax since 1996… almost my entire tax-paying life. I can’t tell you how much money (in total) I’ve spent on Turbo Tax. I understand fees for preparation, especially when you’re dealing with 1099 forms, but to charge **so much** extra to have the fee deducted from your refund when it finally comes in has really bothered me. It really is like a loan-shark type of deal… ridiculous interest rates on a short-term loan. I never liked it, but (for a number of reasons I don’t care to get into on this forum) I had no other alternatives.
Many commenters report using the tax service (yes people, this is a tax service) for years yet now claim they are victims & want pay back. Do tell, why after the first year of filing via Turbotax & being charged the now disputed fees didn’t you just prepare your own taxes forms the old fashion way. For those of you falling over yourselves looking for a reason to cash in, don’t worry, a law firm getting the bigger chunk of the lawsuit dollars found a loop hole for you. If you need to blame someone (for forcing) you to use a tax service look no further than our federal & state governments. They’ve created such a tax reporting mess that even the common man now feels he must pay a professional to report his tax obligations. Personally, I appreciate the convenience & having someone watching my back when filing my taxes, so I plan to continue to use & pay for the Turbo Tax Service.
i have been using turbotax since the year 2000. I am able to read quite well and hence I was never “surprised” with charges.All fees were prominently displayed in my book. I agreed to the terms. therefore do not believe I nor anyone else is now entitled to $. they did not force anyone to use their product!.waaay too many people out for a free ride.if you don’t like them or their practices, go somewhere else. lots of other tax products out their.