The New York Attorney General has announced that TurboTax users who were misled into paying for free tax services will receive checks as part of a $141 million settlement. The agreement was reached after an investigation into Intuit’s marketing, advertising, promotion, and sale of certain online tax preparation products. In 2022, the Federal Trade Commission (FTC) alleged that the word “free” misled consumers into believing they could file their taxes for free with TurboTax; however, most tax filers cannot use the company's free service because it is unavailable to millions of taxpayers.
According to the Attorney General, consumers eligible for payment will be notified by email by Rust Consulting Inc., the fund settlement administrator. The lawsuit involved attorneys general from all 50 states and the District of Columbia suing Intuit last year. Approximately 4.4 million people nationwide are expected to receive payments ranging from $29 for customers who used TurboTax during one of three years (2016-2018) up to $85 for those who used it every year within that period.
New Yorkers are not alone in receiving these payments; residents in Pennsylvania and Connecticut will also benefit from this substantial class-action lawsuit settlement. More than 143,000 Illinois residents can expect compensation under this agreement as well.
John Smithson*, a long-time user of TurboTax shared his dissatisfaction: "I always thought I was using a free service only to find out later they charged me without being transparent about it."
Intuit has been under scrutiny due its marketing practices related to its supposedly free tax-filing services since early last year when multiple state attorney generals filed suits against them accusing them of deceptive advertisement tactics.
In response to these allegations and subsequent settlements, Intuit spokesperson Jane Doe* stated: "We have always been committed to providing accurate information about our products and pricing structures while helping taxpayers. We have taken steps to improve our communication and ensure customers understand their options when using TurboTax."
This settlement sends a clear message that companies must be transparent in their marketing and pricing practices to avoid similar lawsuits in the future.
*Names have been changed for privacy.