COLUMBIA, S.C. (WBTW) — South Carolinians will be distributed more than $2 million after a multistate deal between attorney generals and TurboTax, South Carolina Attorney General Alan Wilson announced Wednesday morning.
“TurboTax’s misleading advertising caused many South Carolinians to unnecessarily pay for tax preparation services,” Wilson said in the written announcement. “I am pleased to be able to provide relief to South Carolina consumers, including members of the military, who were deceived by TurboTax’s business practices.”
Under the deal, TurboTax/Intuit will pay $141 million in restitution after advertising that services were free, when customers actually ended up paying for them. That included the business’ “free, free, free” ad campaign.
Those ads, according to the announcement, used “deceptive digital tactics to steer low-income consumers toward its commercial products and away from federally-supported free tax services.”
TurboTax participated in the IRS Free File Program, which 70% of taxpayers are eligible for. Because of that agreement, the IRS agreed to not compete with tax-preparation companies.
TurboTax then advertised its “TurboTax Free Edition,” a “freemium product,” which was only free to about 33% of taxpayers. Intuit also paid for search ads that directed people away from the IRS program to TurboTax’s “freemium” service, instead.
“Intuit also purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free,” the announcement reads. “Moreover, TurboTax’s website included a ‘Products and Pricing’ page that stated it would ‘recommend the right tax solution,’ but never displayed or recommended the IRS Free File program, even when consumers were ineligible for the ‘freemium’ product.”
Intuit withdrew from the IRS Free File Program last July, according to the announcement.
Customers who used TurboTax’s Free Edition between 2016 and 2018 will receive a $30 for every year they used it. Those who qualify will be notified and sent a check.
Under the agreement, TurboTax must also stop misrepresenting its products, increase disclosures when it markets free services, design products to inform users if they’re eligible to file for free and stop requiring customers to start over the tax filing process if they exit a paid product to use a free one.