Iowa Attorney General Tom Miller secured $1.02 million from Intuit, the parent company of TurboTax, for deceiving more than 33,000 Iowans into paying for tax services that should have been free, the Attorney General’s office announced on May 4.
Intuit will pay $141 million to customers across the country and is being forced to suspend a “free, free, free” ad campaign that incentivized using TurboTax’s services under the false assumption it would not have a cost.
Iowans who used the TurboTax Free Edition from 2016 through 2018 and had to pay, despite being eligible for the free version as part of the IRS Free File program, are expected to receive a direct payment of approximately $30 for each year that they were deceived, according to a press release.
“Intuit manipulated internet search results to hide its free file services from eligible low-income consumers, and it steered them to expensive paid products through its advertising and marketing practices,” Mr. Miller said in a statement.
ProPublica reported the company was using misleading tactics to steer low-income consumers toward its commercial products and away from federally supported free tax services.
Investigations found that Intuit bid on paid search advertisements to direct customers looking for IRS Free File to TurboTax’s “freemium” product, and blocked its IRS Free File landing page from search engine results during the 2019 tax filing season.
The IRS Free File program is a public-private partnership that allows taxpayers earning $34,000 and members of the military to file their taxes for free. However, TurboTax Free Edition is only free for approximately one-third of U.S. taxpayers compared to 70% of taxpayers eligible for the IRS Free File program.