TurboTax forced to stop misleading “free, free, free” ads and pay back $141M

The ad campaign that lured customers with promises of free tax preparation services, only, will be stopped and the company will pay over a hundred million dollars in refunds. The IRS Free File program is free to 70 percent of taxpayers, but that isn't the case with a separate product that isn't actually free to most people.

James said in the settlement announcement that Intuit cheated millions of low-income Americans out of free tax filing services. We are putting millions of dollars back into the pockets of impacted Americans because every state is holding Intuit accountable for scamming millions of taxpayers.

More than four million consumers who used the Free Edition of the TurboTax product were told they had to pay to file even though they were eligible to do so for free.

Intuit: “We admitted no wrongdoing”

The administrative fund costs make up about 2.5% of the total. In a statement on the settlement, Intuit said it agreed to pay $141 million to put the matter behind it.

In coming to a resolution on this matter, we admitted no wrongdoing and are pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers.

It is not clear when payouts will be to consumers. The effective date is defined as when all parties have signed the agreement. An oversight committee composed of attorneys general will have sole discretion regarding the administration and distribution of the Settlement Fund.

The settlement requires Intuit to stop the ad campaign immediately. Intuit will not be allowed to publish any of the offending ads or any ads that are substantially similar in their repetition of the word free. Some of the specific disclosure requirements are no longer required after 10 years.

AG cites “deceptive and unfair trade practices”

The New York AG's office said that it led a multistate investigation that found that Intuit engaged in deceptive and unfair trade practices that limited consumers participation in the IRS Free File Program.

The page that claimed to recommend the right tax solution was never displayed or recommended by the IRS. The investigation was opened in response to the reporting by ProPublica.

The IRS Free File program ended in July 2021. The IRS promised not to compete against private companies in exchange for the industry agreeing to offer free tax services to people with low and moderate incomes. The IRS had promised not to enter the tax return software and e-file services market in late 2019.