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A federal judge this week rejected a proposed $40 million settlement between Intuit, the company behind TurboTax, and a Class of consumers suing the company for allegedly directing them away from the TurboTax free edition even though they were eligible to use it.
District Judge Charles R. Breyer, who sits on the bench in the Northern District of California, issued a terse opinion, saying only that, having considered the arguments both sides made during the settlement hearing, and the legal briefs they filed, he was denying approval to the proposed settlement.
“An opinion will follow in due course,” Judge Breyer wrote.
The issue likely preventing Judge Breyer from approving the deal is the objections raised by some of the Class Members who said the settlement would deprive them of their due process rights because it would prevent them from continuing through arbitration with Intuit.
The company had originally argued its users were required to submit any claims to mandatory arbitration under the terms of the TurboTax user agreement. Lawyers for the plaintiffs fought that claim, but ultimately Intuit prevailed in the Ninth Circuit Court of Appeals.
As a result, many of the consumers participating in the class action lawsuit entered into arbitration with Intuit.
Shortly after that happened, the company and the plaintiff’s legal team worked out a proposed settlement that called for $28 million to be paid to the Class Members – which reportedly would have netted them $56 each if 7.5% of those eligible submitted a claim form. The lawyers representing the consumers would get $10 million plus litigation expenses.
The TurboTax free edition case began as multiple class actions, all claiming the same financial injuries, that were consolidated in June 2019. The plaintiffs all said they were intentionally directed away from the TurboTax free edition and to a version of the tax filing software they had to pay for, even though they qualified to use the free edition.
By doing so, the plaintiffs claimed that Intuit violated its agreement with the Internal Revenue Service to offer free filing services to some low-income users.
Under the terms of the Free File Alliance agreement, Intuit and other tax preparation services are required to offer free filing programs to the lowest 70% of income earners. In return, the IRS is prevented from offering competing tax filing services.
They also accused Intuit of violating various consumer protection and unfair business practices laws in California, New York, and Pennsylvania.
Have you ever qualified for the TurboTax free edition? Were you directed to a paid version of the software instead? Tell us about it in the comment section below.
Arena and the other Class Members are represented by Daniel Girard, Jordan Elias and Simon Grille of Girard Sharp LLP and by Norman E. Siegel, J. Austin Moore and Jillian Dent of Stueve Siegel Hanson LLP.
The TurboTax Free Edition Class Action Lawsuit is Michele Arena, et al. v. Intuit Inc., et al., Case No. 3:19-cv-02546, in the U.S. District Court for the Northern District of California.
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157 thoughts onJudge Rejects $40M Intuit TurboTax Free Edition Class Action Settlement
I’ve used TT for the last 8 years and have had to pay for their services at least 3 of those years. Please also add me to the list, if I’m not already on there. Thank you
I know they got me a few years. I knew I should have been eligible for the free online tax service but it kept directing me to the one that I had to pay for.
Add Me. This year I absolutely do not need to pay yet. They are still asking me to upgrade. I am only filling because I want to be eligible for any stimulus that might come. We are filling Social Security, and we owe no taxes, nor have I worked this year because of health problems, but they still want to charge me. I will probably go somewhere else to do my own taxes.
I have used Turbo Tax for about 10 years and it says you can file for free then after you enter all you information it would tell me I didn’t qualify for the free option so had to pay every time. Please add me to the list for the lawsuit
Yes I have used Turbotax for the past 7 or 8 years to file my taxes myself on my computer and each year when I expect it to be free it has said something about charging a fee for filing and each time I have had to spend at least an extra 15 minutes to figure out how to get it for free, elderly people that barely know how to work a computer wouldn’t be able to figure any of this out for themselves and at this point they would just have to say oh well I guess it won’t hurt to pay 30 or 40 bucks and go through with it and this is how Tt is making so much off of people by making it so difficult in finding the free version. If u choose to pay for the service then they make sure they have made it to where after u choose to pay the fees for filing with the upgraded service you cannot change it back to free filing at all, there is no way possible to make it free at this point but they sure do have a way for you to keep upgrading to the more expensive version and then after you upgrade to the next, more expensive version you cannot go back to the previous way of filing(cheaper) so once you click on a more expensive version you are stuck with that option for filing. By Tt doing this they are able to secure more money from users by making it impossible to switch back to the free version, most people may click to the upgraded version just checking it out and not necessarily wanting this version but there is no option of going back at this point. This is a very sneaky thing for them to do, it is to where if you upgrade to a more expensive version to file you have no choice at that point but to file with the fees or continue upgrading to a more expensive version, paying more to file. They get you into a situation of continuing to move forward to file your taxes which is what most people is going to do, not caring about what they have to pay at this point. Not to mention that the next version to upgrade to is not really any better than the previous cheaper version, they promise more credits and whatnot but doesn’t really do any more than the previous.
I have been using TT for over 10 years and I always thought I qualified for the free version, but somehow it always seemed to cost me at the end .
Yes, I used turbo tax and would like to be added to the lawsuit…
Yes I’m from Oklahoma and I used Intuit turbo tax. The same thing happened to me being directed to another form that forced you to pay. I paid $137.00 and that was the last time I used them.
MISREPRESENTATION.
I would like to be added to the Turbo Tax class action. This same thing happened to me when I filed my 2018 taxes.
Please add me to class action lawsuit against Turbotax.
I wasnt even aware that free was an option anymore. I payed over 100$ 2019 if I remember correctly. And I chose the cheapest options. At the end there was even another 40$ fee tacked on.