Intuit to pay $5M settlement to Ohioans
The company behind the TurboTax tax-filing program will pay $141 million to customers across the U.S. who were deceived by misleading promises of free tax-filing services, New York’s attorney general announced Wednesday.
Under the terms of a settlement signed by the attorneys general of all 50 states, Mountain View, California-based Intuit Inc. will suspend TurboTax’s “free, free, free” ad campaign and pay restitution to nearly 4.4 million taxpayers, New York Attorney General Letitia James said.
Ohio Attorney General Dave Yost said Wednesday that he has secured $5 million for Ohio consumers that will be distributed directly to 163,367 eligible Ohioans.
“Intuit’s scheme to make a buck by tricking responsible Ohio taxpayers is unacceptable,” Yost said. “We
are holding Intuit accountable and putting money back into consumers’ pockets.”
The investigation in to Intuit began after the nonprofit newsroom ProPublica reported in 2019 that the company was using deceptive digital tactics to steer
low-income consumers toward its paid products and away from federally supported free 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. “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”
“As part of the agreement, Intuit admitted no wrongdoing, agreed to pay $141 million to put this matter behind it, and made certain commitments regarding its advertising practices,” representatives for Intuit said in a blog post Wednesday. “Intuit already adheres to most of these advertising practices and expects minimal impact to its business from implementing the remaining changes going forward.”
Until last year, Intuit offered two free versions of TurboTax. One was through its participation in the Internal
Revenue Service’s Free File Program, geared toward taxpayers earning roughly $34,000 and members of the military. Intuit withdrew from the program in July 2021, saying in a blog post that the company could provide more benefits without the program’s limitations.
The company also offers a commercial product called “TurboTax Free Edition” that is only for taxpayers with “simple returns,” as defined by Intuit.
According to documents obtained by ProPublica, Intuit executives knew they were deceiving customers by advertising free services that were not in fact free to everyone.
“The website lists Free, Free, Free and the customers are assuming their return will be free,” an internal company PowerPoint presentation said. “Customers are getting upset.”
Under the agreement,
Intuit will provide restitution to consumers who started using the commercial TurboTax Free Edition for tax years 2016 through 2018 and were told 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.
Consumers are expected to receive a direct payment of approximately $30 for each year they were deceived into paying for filing services, James said.
“We empower our customers to take control of their financial lives, which includes being in charge of their own tax preparation,” an Intuit spokesperson said in 2019.
The spokesperson added that a “government-run prefilled 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.”