FRANKFORT, Ky. — Attorney General Daniel Cameron announced that he reached a settlement with TurboTax’s parent company Intuit Inc. (Intuit) for deceiving Kentucky consumers into paying for tax services that should have been free. Kentucky consumers will receive $1.6 million in restitution as part of a multi-state settlement on behalf of consumers across the nation who were unfairly charged for tax preparation services.
An investigation into Intuit began after ProPublica reported that the company was using deceptive digital tactics to steer low-income consumers toward its commercial products and away from federally-supported free tax services. The 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.
Under the agreement, Intuit will provide restitution to millions of consumers nationwide who started using TurboTax’s Free Edition for tax years 2016 through 2018 and were told that they had to pay to file, even though they were eligible to file for free under the IRS Free File program.
Consumers can expect to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Eligible consumers will automatically receive notices and a check by mail.
Under the settlement, Intuit also agrees to reform its business practices by:
- Suspending TurboTax’s “free, free, free” ad campaign that lured customers with promises of free tax preparation services, only to deceive them into paying for services.
- 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.
Attorney-General Cameron joined 49 states and the District of Columbia in reaching this agreement. 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. The states wish to think the Federal Trade Commission for assistance in the investigation.
To view a copy of the settlement agreement, click here.
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