Texas, Florida consumers impacted most by national settlement over Turbo Tax

By Bethany Blankley | The Center Square

The Delaware-based company, Inuit Inc., which markets Turbo Tax, reached a $141 million settlement with all states and the District of Columbia but consumers in Texas and Florida were impacted the most.

The settlement comes two years after a multi-state investigation began led by the attorneys general of Illinois, New Jersey, New York, North Carolina, Tennessee, Texas, and Washington.

The investigation concluded that consumers were allegedly misled to pay for services they shouldn’t have, with Texans and Floridians paying the most.

According to the agreement, the number of impacted Texas consumers is 465,793, or 10.41% of all covered in the settlement. The number of impacted Floridians is 335,246, or 7.5%.

Under the agreement, eligible Texas consumers will receive more than $14 million in restitution.

Eligible Florida consumers will receive more than $10.3 million.

All consumers nationwide who used TurboTax’s Free Edition, but were charged in tax years 2016 through 2018, will automatically receive a direct payment of approximately $30 for each year they were charged. They should begin receiving their restitution payments within the next few months.

The Intuit settlement continues Texas Attorney General Paxton’s efforts to return money directly to affected consumers, his office says. From 2017 through 2021, the AG’s Consumer Protection Division won $60 million in court-ordered restitution for Texans.?

Florida Attorney General Ashley Moody said, “Not only have we secured millions for those who were misled into paying for services that they could have obtained for free, we also stopped these deceptive practices both now and for future consumers of Intuit products.”

The multistate investigation found that Intuit engaged in deceptive and unfair trade practices that limited consumers’ participation in the Internal Revenue Service’s Free File Program.

Intuit’s TurboTax’s “free, free, free” ad campaign and TurboTax website misled consumers to believe they could file their taxes for free, the investigation found.

It wasn’t until consumers spent the time and effort inputting tax information into TurboTax that they learned they were required to pay for the product. Some consumers who were eligible for the IRS Free File product were led to believe they needed to upgrade to pay for services when they didn’t, the investigation found.

Intuit also used similar names for its IRS Free File product and commercial “freemium” product. Its search-engine services also allegedly misdirected consumers to the wrong services. Those who searched for the IRS Free File product were directed to the TurboTax “freemium” product instead, for example, the investigation found.

Intuit also blocked its IRS Free File landing page from search engine results, the investigation found.

As part of the agreement, Intuit agreed to terminate its “free, free, free” ad campaign. It 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; and not requiring consumers to restart tax filings if the consumer exits one of its paid products to use a free product instead.