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UPDATE: On Dec. 17, 2020, a federal judge 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.
A $40 million settlement has been reached in a TurboTax class action lawsuit that claimed the company falsely advertised its services as being free.
U.S. District Judge Charles R. Breyer on Thursday approved the settlement, which will resolve claims that Intuit misled consumers into paying for tax preparation services when they were entitled to receive the free version.
As part of the TurboTax class action lawsuit settlement, Intuit has agreed not to cause the IRS Free File Program Delivered by TurboTax landing page to be “de-indexed” from organic search results.
Intuit also agrees “to disclose the existence of the IRS Free File Program and qualifications to file for free under the IRS Free File Program on one or more webpages” and to maintain a public webpage on the same domain that explains the forms and schedules that are not covered under the TurboTax Free Edition.
The company is required to create at least three blog posts each year between Jan. 15 and April 15 for the purpose of informing customers about the IRS Free File Program.
Intuit will send a minimum of six “email reminders to returning IRS Free File Program Delivered by TurboTax customers,” until the customer files their taxes or unsubscribes from the emails, the settlement agreement says.
When it comes to marketing TuboTax Free Edition, Intuit is required to adhere to Federal Trade Commission (FTC) online marketing guidelines.
All of these stipulations are to remain in effect as long as Intuit participates in the IRS Free File program, up to three years maximum.
In the event Intuit fails to comply, the plaintiffs have agreed to give the company written notice of that alleged failure, at which point Intuit will have 45 days to come into compliance.
Class Members in the TurboTax class action lawsuit settlement will be eligible to file their taxes using the IRS Free File Program for free in 2021, the settlement agreement says.
In addition to these nonmonetary benefits, Intuit will pay $40 million into an escrow account, according to the settlement. Attorneys’ fees and other costs will be paid from this amount; the total will not exceed 25% of the $40 million.
According to the TurboTax class action lawsuit settlement agreement, plaintiffs filed 10 separate class action lawsuits beginning in May 2019.
The class action lawsuits alleged Intuit deceived the plaintiffs into paying fees for filing their tax returns because the company either didn’t make them aware of software Intuit donates to the Internal Revenue Service’s (IRS) Free File Program or were led to believe they didn’t qualify for a free TurboTax product when they were told they were not eligible for the free TurboTax commercial product.
The TurboTax class action lawsuits were consolidated in federal court in June 2019, and the plaintiffs filed their amended complaint Sept. 13, 2019, according to the settlement agreement.
That consolidated complaint accused Intuit of violating the California Unfair Competition Law and of unjust enrichment.
In late October 2019, Intuit moved to send the case to arbitration, but that motion was denied by Judge Breyer on March 12, 2020.
In his order, Judge Breyer said the Intuit TurboTax terms of service were not adequate to inform consumers they were giving consent to be bound by arbitration when signing into TurboTax.
According to Judge Breyer, the hyperlink to the terms and conditions on the Intuit TurboTax website was displayed in blue but was not underlined, and therefore did not meet the “gold standard” of how terms and conditions should be displayed to website users.
He also said the notice that appeared on the Intuit sign-in and account recovery pages contained several similar hyperlinks that could cause confusion. Links that appeared on both pages bound customers clicking on “sign in” or “continue” to TurboTax’s Terms of Use — and those terms contained the arbitration clause at issue.
“A reasonable user might well find this arrangement confounding,” Judge Breyer’s opinion said. “He or she might not realize the notice contained a second hyperlink.”
However, Intuit sought and won an appeal in the 9th Circuit Court of Appeals, the court finding that the claims must go to arbitration.
Do you use TurboTax? Tell us about your experience in the comments section below.
The plaintiffs in the TurboTax class action lawsuit are represented by Daniel Girard of Girard Sharp LLP and Norman E. Siegel of Stueve Siegel Hanson LLP.
The Intuit TurboTax Class Action Lawsuit is Sinohui, et al. v. Intuit Inc., Case No. 5:19-cv-02546, in the U.S. District Court for the Northern District of California.
Read About More Class Action Lawsuits & Class Action Settlements:
1,536 thoughts onTurboTax Class Action Lawsuit Settlement Reached Over Whether Its Service Is Free
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I have efiled for “FREE” since I started with turbo tax cause 3kids I couldn’t afford it really ,just to get to the end and be charged almost 200$ each time I’ve Efiled for “Free” since at the least 2004
If it’s possible to be added I’d like to be too last year turbo tax charged me but didn’t efile my taxes I asked for a refund of the $59 state filing fee and they rejected it this year having issues they want to charge over $150 when I qualify for FREE tax service. They ripping people off and it’s people that are low income and elderly shame on you TurboTax. Spent over and hour and half on phone with no resolution
Filing through TurboTax has been a nightmare. Do I have the craziest story ever!
I filled with turbo tax / intuit and was said to be free if you did it yourself. I did this same thing year before with no incident. This year when I was completely done and ready to file I was directed to pay for services of upward 200. So after sometime of looking for a human representative and only being able to correspond with a bott. I gave in a paid the fee. The only thing different is that I was said that all my information was now going to be overlooked by one of there associates and that I could be sure that all numbers would stand correct and my refund was now for sure 💯 correct. I was to have money comming my way and i felt that i was at least satisfied with that. Here to find out not only was my personal information stolen as I could not download my content. I owed about the same amount I paid to have my taxes done my them after receiving a letter in mail from IRS.. 2020 2021 used turbo tax /intuit.
I have not received my 2021 taxes or 2022. I have unsuccessfully tried to talk to a live human but itdidn’t happen. I have been charged over $200 dollars to do my taxes. They are no help, they tell you to ask a community for help. Only thing they provide is a form, zero help. They should be closed down. I am 73 and this has caused me a lot of anxiety.
Please add me as well. I’ve paid to file with Intuitive and was charged by TurboTax tax.
Please add me to the Class action. I have had to pay for the past couple of years.
Add me
Please add me.
I have had to pay for the past two years. I would like my refund!
Please I’ll be too I’ve been fine with TurboTax for over 10 years now and I always pay more than $200 it has never been free
Typo -Please add me too. I’ve been filling with TurboTax for 10yrs. It’s never been free. I’ve always paid $200 or more dollars.
Please add me I’ve had TurboTax for 5 years and I’ve never paid less than 225 including this year to file
I have used Macintax since it was available. Used TurboTax in 2021 still have not received my refund.