TurboTax owner Intuit to pay $141M settlement over misleading ads

NEW YORK — Intuit, the company that sells the popular TurboTax program, will pay $141 million in restitution to nearly 4.4 million taxpayers for allegedly steering low-income Americans away from federally supported free tax services.

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Intuit will provide restitution to consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and who were told that they had to pay to file even though they were eligible for the version of TurboTax offered as part of the IRS Free File program, according to The Associated Press.

The settlement, which was announced Wednesday, said that Intuit would also be forced to end its “free, free, free” ad campaign, according to CNN.

In the lawsuit filed in March in California, the FTC said that TurboTax repeatedly advertised its product and service as free. In reality, only “simple” tax returns qualify as free.

New York Attorney General Letitia James said that the investigation came after a 2019 ProPublica report that found the company was steering low-income tax filers away from free federally supported tax services.

“For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans,” James said in a statement obtained by AP. “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”

Consumers who used TurboTax Free Edition between 2016 and 2018 should expect a payment of around $30 for each year that they were deceived into paying for filing services, James said.

In 2019, An Intuit spokesperson declined to answer questions about the ProPublica report, but provided a statement on their services.

“We empower our customers to take control of their financial lives, which includes being in charge of their own tax preparation.” The spokesperson added that a “government-run pre-filled tax preparation system that makes the tax collector (who is also the investigator, auditor and enforcer) the tax preparer is fraught with conflicts of interest.”