Intuit to pay $141M to consumers for allegedly deceptive ads on 'free' product
Intuit (NASDAQ:INTU) stock is falling 2.4% in midday trading after agreeing to pay $141M in restitution to consumers who paid for TurboTax services that should have been free under an agreement with New York Attorney General Letitia James and other state AGs.
The company reached an agreement with all 50 states and the District of Columbia to settle the matter. New York state will receive more than $5.4M for more than 176,000 consumers who were deceived into paying the fees, James said.
The NY AG's office investigated Intuit after ProPublica reported that the company was using deceptive tactics to direct low-income consumers to its commercial products and away from federally supported free tax services.
According to the AG's investigation, Intuit (INTU) offered two free versions of TurboTax â one that's through its participation in the IRS Free File program, which allows taxpayer earning ~$34K and members of the military to file taxes for free and a product called "TurboTax Free Edition," which is only free to taxpayers with "simple returns."
"TurboTax marketed this 'freemium' product aggressively, including through ad campaigns where 'free' is the most prominent or sometimes the only selling point," the NY AG office said. However, that product was only free for about a third of U.S. taxpayers.
Under the settlement, consumers are expected to receive a direct payment of ~$30 for each year they were deceived into paying for filing services, the statement said.
Previously (March 29), Intuit (INTU) said it will challenge a complaint by the U.S. Federal Trade Commission, saying the FTC inaccurately alleged that its ads directed consumers eligible for free tax filing services to paid products.