You must have seen those ads of TurboTax that they’re offering so-called “free” tax filing, but in reality, that wasn’t even close to that. Nah, for many out there, when people were in the last step of filing their taxes, it was only then that TurboTax let them know that they must pay for all the process they did on the platform, and sure enough, when this much work and time went into it, some people paid that amount. And this is the issue that then led to this Turbo Tax Class Action Lawsuit and it became a big thing just recently.
Why Did People Sue TurboTax?
It was a very simple reason like the users felt that they were tricked. TurboTax advertising its services as “free,” but most people complained that they had to pay in order to be able to file their taxes.
So these are the scenarios that usually happened. The first time, you initiated your tax filing, assuming it’s free. You entered all your data. Then, at the very last moment, you were asked to upgrade and pay. This can be quite irritating, especially after investing a good deal of time in it.
Other customers argued that they were eligible for a government-free filing program; however, they were not given a clear indication of the program. Instead, they ended up paying TurboTax, which resulted in a lawsuit.
What Was Going On Between 2016 And 2018?
Most of the grievances originated from this time frame. Millions of users were expecting to file for free during that time.
The problem is quite different from what the majority of users thought. Many of them, in fact, qualified for a government-free program, but they were directed towards TurboTax’s own “free” version, which was limited. So, once the users exceeded those limitations, they had to pay. Therefore, the people thought they had been led in the wrong way from the very beginning. Also, since this was going on for years, the number of affected users increased a lot.
What Does The $40 Million Lawsuit Refer To?
Users launched a class action lawsuit against TurboTax in around 2020. In a class action, people who share the same complaint file a lawsuit together. It was reported that 19 million people got the impression that they were being misled and ended up paying unexpectedly, as the company was supposed to remain free. But it doesn’t mean that the company acknowledged the mistake. Such settlements are usually made to prevent long court cases.
What Was The $141 Million Settlement In 2022?
This case was the largest one.
In 2022, all 50 US states and Washington, DC, settled with Intuit, the parent company of TurboTax. The firm was supposed to compensate the TurboTax users $141 million for the period between 2016 and 2018, who qualified for free filing but were charged for the same. About 4.4 million users were involved and didn’t need to apply. Payments were made automatically. Most of the users got around $29 to $30 a year, and some even received up to $85 for their multiple years.
Did The Government Take Action?
They did.
The Federal Trade Commission (FTC) took charge.
In 2022, the FTC filed a complaint against TurboTax for deceptive advertising, mainly about the usage of the word “free.” According to the FTC, by 2024, the company has to either stop the advertisements of their services as free unless they are really free to all, or otherwise explain clearly who is eligible. This step was taken to guarantee more consumer information.
What Happened In 2026?
In 2026 March, a U.S. court of appeals took a look at the FTC’s order. The court handed the case back for further review. This doesn’t signify that the matter is settled, like it just indicates that the judicial process is still moving.
