Intuit to pay $141 million settlement over misleading TurboTax ads

Intuit has agreed to pay $141 million in restitution after an investigation conducted by the Office of the Attorney General (OAG) revealed the TurboTax owner engaged in phony digital tactics to lure low-income Americans away from federally-funded free tax preparation services.

The multistate investigation, prompted by ProPublica’s conclusive report, also unearthed Intuit’s counterfeit “free, free, free” ad campaign to boost sales of TurboTax’s Free Edition.

While TurboTax "freemium" products were free for approximately one-third of US taxpayers, IRS Free File products were free for 70 percent.

In its elaborate scheme to deceive taxpayers, Intuit also barred its IRS Free File landing page from search engine results in a bid to covertly deny the free filing option to eligible taxpayers during the 2019 tax filing season.

Under the terms of a settlement signed by the attorneys general of all 50 states and the District of Columbia, Intuit will dismiss TurboTax’s ad campaign and pay restitution to nearly 4.4 million taxpayers who were coaxed into using the company’s ‘paid’ TurboTax Free Edition for tax years 2016 through 2018, limiting their participation in the free IRS Free File Program offered through TurboTax.

Per reports, affected consumers will receive a direct payment of approximately $30 for each year that they were defrauded. In total, the state of New York will receive over $5.4 million for nearly 176,000 New Yorkers who were tricked into paying for free tax services.

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” commented Attorney General James.

“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. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal. New Yorkers can count on my office to protect their wallets from white-collar scammers.”