Attorney General Mark Brnovich today secured $3.1 million from the operator 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 manipulate them into paying for services. All 50 states and the District of Columbia have signed the agreement. Arizona will receive $3.1 million for consumers.
“None of us may be able to escape death and taxes, but I will always fight deceptive advertising,” said Attorney General Mark Brnovich. “You cannot turn around and charge folks for services that were advertised as free.”
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 (IRS), which allows taxpayers earning roughly $34,000 or less and members of the military to file their taxes for free.
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 U.S. taxpayers. In contrast, the IRS Free File product was free for 70 percent of 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 purposely 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 it never displayed or recommended the IRS Free File program, even when consumers were ineligible for the “freemium” product.
Consumers are expected to receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services. Impacted consumers will automatically receive notices and a check by mail.
This case was handled by Consumer Protection Unit Chief Matthew du Mee.
If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you can contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431.