Duped TurboTax Customers Are Getting a $141M Refund

As part of 2022 settlement with NY AG's office, checks are going out to low-income filers
By Newser Editors and Wire Services
Posted May 5, 2023 11:00 AM CDT
Duped TurboTax Customers Are Getting a $141M Refund
This 2023 photo shows TurboTax on display. In a settlement agreement last year, TurboTax owner Intuit Inc. was ordered to pay $141 million to low-income consumers who were deceived into paying TurboTax to file their federal returns—despite being eligible for free, federally-supported tax services.   (AP Photo/Gene J. Puskar)

Millions of Americans who qualified for free tax services—but were instead deceived into paying TurboTax for their returns—will soon get settlement checks in the mail. In a settlement last year, TurboTax owner Intuit Inc. was ordered to pay $141 million to some 4.4 million people across the country, reports the AP. Those impacted were low-income consumers eligible for free, federally-supported tax services—but paid TurboTax to file their federal returns across the 2016, 2017, and 2018 tax years due to "predatory and deceptive marketing," New York Attorney General Letitia James said. All 50 states and the District of Columbia signed the May 2022 settlement, which was led by James.

Consumers eligible for restitution payments do not need to file a claim, the New York Attorney's General Office said Thursday. They will be notified by an email from Rust Consulting, the settlement fund administrator, and receive a check automatically. Checks will be mailed starting next week, and continue through the month of May. The amount paid to each eligible consumer ranges from $29 to $85—depending on the number of tax years they qualify for. "TurboTax’s predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes," James said in a statement. "Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes."

At the time of the May 2022 settlement, James said her investigation was sparked by a 2019 ProPublica report that found Intuit was using deceptive tactics to steer low-income tax filers away from the free, federal services they qualified for—and toward its own products. Under the terms of last year's settlement, Intuit agreed to suspend TurboTax’s "free, free, free" ad campaign. According to documents obtained by ProPublica, Intuit executives were aware of the impact of advertising free services that were actually not free for everyone. "The website lists Free, Free, Free and the customers are assuming their return will be free," a company PowerPoint presentation said, per ProPublica. "Customers are getting upset." In a blog post following the settlement, Intuit reps said the company "admitted no wrongdoing" in the agreement—adding that Inuit "agreed to pay $141 million to put this matter behind it."

(More TurboTax stories.)

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