May 4, 2022
Nevada Joins All 50
States in Agreement with TurboTax Owner Intuit for Deceiving Low-Income
Americans into Paying for Free Tax Services
Carson
City, NV –
Today, AG Ford has announced his office secured $1,544,628.43 from the owner of
TurboTax, Intuit Inc. (Intuit), for deceiving consumers into paying for tax
services that should have been free. As a result of a multistate agreement,
Intuit will pay $141 million in restitution to millions of consumers across the
nation who were unfairly charged. In addition, Intuit must suspend 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. All 50
states and the District of Columbia have signed onto the agreement.
The
agreement provides for restitution to be provided to the 49,883 Nevada consumers
who were deceived into paying to file their federal tax return. Impacted
consumers will automatically receive notices and a check by mail.
“We
will not stand by as companies misrepresent and deceive customers into
purchasing their goods or services,” said AG Ford. “If companies are not truthful in their advertising and
their dealings with the public they will be held accountable.”
An
investigation into Intuit began after the investigative outlet 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.
Intuit
has offered two free versions of TurboTax. One was through its participation in
the IRS Free File Program, a public-private partnership with the Internal
Revenue Service, which allows taxpayers earning roughly $34,000 and members of
the military to file their taxes for free. In exchange for participating in the
program, the IRS agreed not to compete with Intuit and other tax-prep companies
by providing its own electronic tax preparation and filing services to American
taxpayers.
In
addition, Intuit offers a commercial product called “TurboTax Free Edition,”
which is only free for taxpayers with “simple returns” as defined by Intuit. In
recent years, TurboTax has marketed this “freemium” product aggressively,
including through ad campaigns where “free” is the most prominent or sometimes
the only selling point. However, the TurboTax “freemium” product is only free
for approximately one-third of US taxpayers.
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. Intuit bid on paid search
advertisements to direct consumers who were looking for the IRS Free File
product to the TurboTax “freemium” product instead. Intuit also purposefully
blocked its IRS Free File landing page from search engine results during the
2019 tax filing season, effectively shutting out eligible taxpayers from filing
their taxes for free. Moreover, TurboTax’s website included a “Products and
Pricing” page that stated it would “recommend the right tax solution,” but
never displayed or recommended the IRS Free File program, even when consumers
were ineligible for the “freemium” product.
Intuit
has 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;
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.
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. All 50 states and the District of Columbia
joined this agreement.
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