TurboTax's parent company will pay out a $141 million as part of a 50-state agreement over its 'deceptive' free tax filing

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TurboTax's parent company will pay out a $141 million as part of a 50-state agreement over its 'deceptive' free tax filing
TurboTaxSOPA Images / Contributor / Getty Images
  • Intuit, which owns TurboTax, will pay out $141 million as part of an agreement announced Wednesday.
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  • A release said that the company misled consumers into paying for a tax service that was supposed to be free.

You're not going to see "free, free, free" commercials about TurboTax anymore — and people all over the country might be entitled to a couple of small checks.

Intuit, the company that owns TurboTax and Mint, will pay out a $141 million agreement for certain customers because of "deceptive" practices, per a 50-state agreement announced Wednesday.

As part of the deal, it will also not be allowed to run the "free, free, free" ad campaign anymore, according to a statement from New York Attorney General Letitia James' office.

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"For years, Intuit misled the most vulnerable among us to make a profit," James' statement said. "We're putting millions of dollars back into the pockets of impacted Americans."

The statement added her office started investigating the company because of ProPublica reporting on Intuit.

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In 2019, ProPublica reported that TurboTax made it difficult to find the portal for filing taxes for free online, among other stories.

Up until 2021, Intuit was part of the Free File program, where companies have to provide free filing for Americans up to a certain income threshold, which is $73,000 in adjusted gross income this year.

In return, the IRS will not create a competing product for filing your taxes for free.

The AG's release says that TurboTax "aggressively" promoted a "freemium" tax filing program that was only free to a third of taxpayers — while using the "free, free, free" advertising.

In contrast, it said, the Free File product would be free for roughly 70% of taxpayers.

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It added that the company used misleading verbiage, search engine tactics, and search ads to steer customers from the Free File product to the "freemium" one.

Per this agreement, Intuit will pay about 4.4 million customers who began to use the freemium version and who TurboTax informed needed to pay to file, even though they were eligible for Free File, from 2016 to 2018.

"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," the statement added.

A representative for James' office told Insider people can expect to receive their checks in "a few months."

The Federal Trade Commission sued Intuit in March for misleading advertising, though a judge denied the agency's request to issue a preliminary injunction from running free filing ads in late April, per the WSJ and Reuters.

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Intuit noted to Insider in a statement it did not admit to any wrongdoing as part of the agreement.

The company "agreed to pay $141 million to put this matter behind it," a company spokesperson said, echoing language from the company's full statement on its blog Wednesday.

"Intuit already adheres to most of these advertising practices and expects minimal impact to its business from implementing the remaining changes going forward," the spokesperson added.

"Intuit is clear and fair with its customers, including with the nearly 100 million Americans who filed their taxes free of charge with our products over the last 8 years," Kerry McLean, Intuit's executive vice president and general counsel said in the company's blog post.

McLean added that the agreement "addresses the issues at the core of the FTC litigation, making that lawsuit entirely unnecessary."

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