TurboTax Class Action Over ‘Free’ Services Settled For $141M

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TurboTax Intuit Free Class Action Settlement Overview: 

• Who: TurboTax Owner Intuit, Inc. has agreed to pay a $141 million settlement to consumers nationwide.
• Why: The settlement would end claims the company deceived millions of low-income Americans into paying for tax services that should have been free.
• Where: The settlement will benefit TurboTax consumers nationwide.

The company behind TurboTax has agreed to pay $141 million to consumers to settle claims it tricked people into paying for a commercial tax filing service when they could have used it for free.

In a press release issued May 4, New York Attorney General Letitia James said her office had reached a record multistate agreement with the owner of TurboTax, Intuit Inc. 

The settlement would end claims the company deceived low-income Americans into paying for tax services that should have been free, James said. 

Intuit will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged. In addition, Intuit must suspend TurboTax’s “free, free, free” ad campaign that lured customers with promises of free tax preparation services only to allegedly deceive them into paying.

All 50 states and the District of Columbia have signed onto the agreement. 

TurboTax Investigation Uncovered Deceptive, Unfair Trade Practices, NY Attorney General Says

The settlement comes after James’ multistate investigation allegedly found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program. 

Intuit used confusingly similar names for both its IRS Free File product and commercial “freemium” product, she said. It also offered a “free” product that was not free for most with TurboTax but that people could have used for free through the IRS.

Earlier this year, the Federal Trade Commission (FTC) filed a lawsuit asking for a temporary restraining order to be placed on Intuit Inc. 

Barring a temporary restraining order, the FTC says Intuit would “be free to continue disseminating the deceptive claim that consumers can file their taxes for free using TurboTax when, in truth, in numerous instances, defendant does not permit consumers to file their taxes for free using TurboTax.” 

In 2020, a judge rejected a proposed $40 million settlement between Intuit and consumers who argued the company had steered them away from using the free edition of TurboTax even though they qualified to use it. 

Have you used Intuit’s TurboTax service to file your taxes? Let us know in the comments!

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