Intuit Will Pay $141M Settlement Over ‘Free’ TurboTax Ads

(Photo: Kelly Sikkema/Unsplash) About a month ago, the Federal Trade Commission (FTC) filed a lawsuit against TurboTax publisher Intuit for falsely advertising many of its services as free. The lawsuit alleged that Intuit was knowingly tricking customers into using TurboTax by saying the tax-filing software was free, then disclosing that users would need to pay to file only after they’d invested time and energy inputting their information. Some users (like those who’d sold a home or were self-employed) were actually required to purchase an upgrade to continue, while others could have continued for free if not for TurboTax’s complicated user interface. 

Now it’s time for Intuit to pay up. New York Attorney General Letitia James announced Wednesday that the company (which also owns Mint, QuickBooks, MailChimp, Credit Karma, and other popular software) will be settling the lawsuit with $141 million in restitution. The terms of the settlement were agreed upon by the attorneys general from all 50 states.

Intuit’s Mountain View, CA headquarters. (Photo: Coolcaesar/Wikimedia Commons)

Intuit’s fine (minus $2.5 million in administrative costs) will be paid out to nearly 4.4 million TurboTax users. Users eligible for payments will be restricted to those who began using TurboTax’s Free Edition for tax years 2016 through 2018, but were told partway through that they’d need to pay to file, even though they were really eligible for the free option. The New York State Office of the Attorney General says eligible users will receive checks in the mail—no action necessary on their part. 

The settlement requires Intuit to halt its “free, free, free” commercials and any other advertising that “misrepresents” the true cost of using TurboTax. Intuit will also need to improve its disclosures in its advertising of free-to-use software, revamp TurboTax’s user interface to “better inform users whether they will be eligible to file their taxes for free,” and stop forcing users to start over when they switch from a paid filing option to a free one. 

“Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said in a statement Wednesday. “Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we’re putting millions of dollars back into the pockets of impacted Americans. This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”

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