TurboTax Agrees to $141 Million Settlement

In contracts-adjacent news, TurboTax’s parent company, Intuit, has agreed to a $141 million settlement with attorneys general from all 50 states, plus DC.  The settlement arises out of TurboTax’s practice, documented in a series of reports from Pro Publica, which detailed a long-term company practice of attracting people to use Turbo Tax’s products by signaling that the service would be provided for free.  TurboTax would then charge taxpayers if the company determined that they did not meet its criteria for access to the free software.  The company would charge taxpayers who were eligible for free tax assistance through federal programs.

As Pro Publica details here, taxpayers who qualified for free income tax assistance but paid TurboTax will receive refunds from the company of $30/year for 2016-2018.  While Pro Publica contends that TurboTax’s misconduct goes back well before 2016, some state statutes of limitations would have precluded further recovery.  Intuit admits no wrongdoing and stands by its marketing.  The company is estimated to have netted $3 billion in the 2016-18 time period.

Pro Publica also reports that Intuit has entered into settlement agreements to resolve the majority of 150,000 separate arbitrations initiated by individual consumers.  A Federal Trade Commission investigation alleging unfair trade practices is ongoing.  It is hard to tell what overall impact this settlement will have on the company, but as its stock price has declined 40% in the last six months, it seems like at least a few clouds remain on the horizon.