Attorney General Phil Weiser announces over $2.5 million in refunds for Coloradans deceived by TurboTax into paying for free tax services
May 4, 2022 (DENVER) – Attorney General Phil Weiser today announced that his office secured $2,574,985.89 for tens of thousands of low-income Coloradans and military members from Intuit Inc., the owner of TurboTax, for deceiving consumers into paying for tax services that should have been free.
A multistate investigation into Intuit, which began after ProPublica reported that the company was using deceptive digital tactics, found that TurboTax deceptively steered low-income consumers toward its commercial products and away from federally supported free tax services.
“Free tax filing services are offered for a reason—to ensure lower-income Coloradans can file their taxes with as little impact to their daily lives and pocketbooks as possible,” Weiser said. “Through today’s settlement, we are returning some of the money that was wrongfully taken from our state’s hardworking residents. We will continue standing up for vulnerable consumers taken advantage of by irresponsible companies.”
TurboTax Free File, a federally supported free service through the IRS Free File Program, is a public-private partnership with the federal government which allows taxpayers earning roughly $34,000 and members of the military to file their taxes for free. In addition to the Free File product, Intuit offers a commercial product called “TurboTax Free Edition,” which is only free for taxpayers with “simple returns” as defined by Intuit. Although TurboTax marketed the Free Edition product through ad campaigns in which “free” was the most prominent or sometimes the only selling point, the product is only free for about 33% of US taxpayers. In contrast, 70% of taxpayers qualify for free filing under the TurboTax Free File product.
The investigation found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program, including by using confusingly similar names for both its IRS Free File product and what it calls its “freemium” product, TurboTax Free Edition.
In addition to using confusing names for the free and “freemium” products, Intuit deliberately manipulated consumers’ search results to push consumers toward its paid product. Intuit also purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free. Moreover, TurboTax’s website included a “Products and Pricing” page that stated it would “recommend the right tax solution,” but never displayed or recommended the IRS Free File program, even when consumers were ineligible for the TurboTax Free Edition.
Under today’s settlement, Intuit will pay impacted consumers about $30 for each year that they were deceived into paying for TurboTax’s Free Edition for tax years 2016-2018—over 80,000 payments in Colorado alone. Impacted consumers will automatically receive notices and a check by mail.
Intuit also agreed in today’s settlement to suspend TurboTax’s “free, free, free” ad campaign, which lured customers with promises of free tax preparation services only to deceive them into paying for services, and to reform other misleading business and advertising practices.
All 50 states and the District of Columbia joined this agreement which requires Intuit to pay $141 million nationally. The Federal Trade Commission assisted in the investigation.
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