Nearly 36,000 Low-Income Arkansans were Deceived into Paying for Free Tax Services
LITTLE ROCK – Attorney General Leslie Rutledge secured a settlement with the owner of TurboTax, Intuit Inc. (Intuit), for deceiving consumers in to paying for tax services that should have been free. As a result of a multistate agreement, 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 deceive them into paying for those services. All 50 states and the District of Columbia have signed onto the agreement. Almost 36,000 Arkansas consumers will share the $1.067 million in restitution payments.
“Intuit deliberately deceived consumers in to paying for their Turbo Tax service that was actually supposed to be free,” said Attorney General Rutledge. “Intuit profited from its lies to Arkansans, and now with this settlement, Intuit will pay over $1 million to Arkansans for its fraud.”
A multistate investigation found that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program. The company used confusingly similar names for both its IRS Free File product and its commercial “freemium” product. Intuit bid on paid search advertisements to direct consumers who were looking for the IRS Free File product to the TurboTax “freemium” product instead. 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.
Under the agreement, Intuit will provide restitution to millions of consumers. Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will automatically receive notices and a check by mail.
Intuit has also agreed to reform its business practices, including:
- Refraining from making misrepresentations in connection with promoting or offering any online tax preparation products;
- Enhancing disclosures in its advertising and marketing of free products;
- Designing its products to better inform users whether they will be eligible to file their taxes for free; and
- Refraining from requiring consumers to start their tax filing over if they exit one of Intuit’s paid products to use a free product instead.
Intuit withdrew from the IRS Free File program in July 2021.
New York and Tennessee led the multistate investigation with support from the attorneys general of Florida, Illinois, New Jersey, North Carolina, Pennsylvania, Texas, and Washington. All 50 states and the District of Columbia joined this agreement.