Nearly 10,000 Wyomingites to Share in $141 Million Settlement Related to TurboTax ‘Deceptive’ Business Practices

By K.L. McQuaid

Special to the Wyoming Truth

Thousands of Wyoming residents who were “tricked” into paying for TurboTax tax preparation products that should have been free will share about $300,000, the result of a multistate settlement with the company’s owner.

Roughly 9,400 Wyoming residents will automatically receive checks of about $30, state Attorney General Bridget Hill announced Thursday. The payments are expected to occur beginning next week and eligible consumers will be notified via email.

“Intuit’s false statements or representations that TurboTax is free, without adequately disclosing the limitations of its free offer, have induced consumers to begin using TurboTax and, after discovering they are not eligible for Intuit’s ‘freemium’ product, to pay for paid TurboTax products,” the state’s Attorneys General complaint stated.

Since at least 2016, TurboTax owner Intuit Inc. “has engaged in what it calls a ‘freemium’ business strategy that monetizes free products,” the complaint stated.

In all, about 4.4 million, mostly low-income consumers nationwide were deceived by Intuit into believing that its tax filing preparation programs were free from 2016 through 2018.

Instead, the company would redirect customers to pay for services that were widely advertised as being without cost. Those same consumers were eligible to file federal tax returns for free with the U.S. Internal Revenue Service’s (IRS) Free File Program.

The total settlement amount came to $141 million, the result of a 2022 agreement between Intuit and Attorneys General from several states and the District of Columbia.

In its complaint that led to the settlement, Hill and the other state’s Attorneys General argued that Intuit used “deceptive and unfair business acts or practices” in advertising and marketing its products and services.

Specifically, Intuit changed the names of its free products several times to confuse consumers and bid on Internet search terms such as “irs.gov/free file” to attract customers while blocking landing pages for its own free services.

Hill said in a release that Intuit “tricked” consumers. Assistant Attorney General William Young declined additional comment on the settlement.

In its own statement, the Mountain View, Calif.-based Intuit admitted no wrongdoing and indicated it agreed to the settlement to “put this matter behind it.”

“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure that the company can return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, the company’s executive vice president and general counsel, in the statement.

“Intuit is clear and fair with its customers,” McLean added. “The company is pleased to be able to continue our strong partnership with governments to best serve the needs of taxpayers across the country.”

Intuit voluntarily withdrew from the IRS’s Free File Program in October 2021, but the settlement will prohibit Intuit from participating in the program for several years.

Additionally, Intuit will have to clearly state in advertising and marketing for 10 years that not all of its TurboTax products are free, according to the settlement.

Wyoming had the fewest number of customers who were covered by the settlement. Conversely, Texas had the most consumers who were affected, at over 465,000, according to settlement documents.