TurboTax settlement in Colorado: AG announced $2.5 million settlement against Intuit

Colorado Attorney General Phil Weiser announced Wednesday that Intuit Inc., the company owning TurboTax, will be paying more than $2.5 million to tens of thousands of Colorado residents who were deceived as part of a national settlement.

An investigation, aided by the Federal Trade Commission, that spanned multiple states found that the company was deceiving low-income customers and military members into paying for tax services that should have been free.

ProPublica first reported that Intuit was using deceptive digital tactics in 2019, the Attorney General’s office said in a statement.

Low-income and military residents are offered federally supported free tax services in a public-private partnership with TurboTax Free File and the IRS Free File Program, allowing those making $34,000 annually or less and military members to file their taxes for free.

“Free tax filing services are offered for a reason–to ensure lower-income Coloradans can file their taxes with as little impact to their daily lives and pocketbooks as possible,” Weiser said.

Intuit also offers TurboTax Free Edition, which is free to taxpayers with “simple returns,” though this only comes out to about 33% of taxpayers, the statement said. About 70% of taxpayers qualify for free filing under the TurboTax Free File product, in partnership with the IRS.

The investigation found that Intuit limited consumers’ participation in the IRS Free File program by using confusingly similar names for both the free product and the “freemium” TurboTax Free Edition, which is only free 33% of the time.

Intuit will pay consumers $30 for each year that they were deceived into paying for TurboTax’s Free Edition for tax years 2016-2018, totaling over 80,000 payments in Colorado. Affected customers will get notices and checks in the mail.

“Through today’s settlement, we are returning some of the money that was wrongfully taken from our state’s hardworking residents,” Weiser said. “We will continue standing up for vulnerable consumers taken advantage of by irresponsible companies.”

Intuit also manipulated search results to push consumers toward the paid product and blocked the IRS Free File page from search results during the 2019 tax filing season, the statement said.

TurboTax’s website also included a product pricing page that stated it would “recommend the right tax solution,” but did not display the IRS Free File program, even if consumers were ineligible for the TurboTax Free Edition, the Attorney General’s office said.

Intuit agreed in the settlement to stop TurboTax’s “free, free, free” ad campaign and to reform misleading business and advertising practices.

Intuit will pay $141 million nationally as part of the settlement.

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