People of the State of California v. Intuit Inc. (TurboTax)
In September 2019, the County Counsel filed a lawsuit against Intuit Inc., the maker of the electronic tax preparation software TurboTax, on behalf of the People of the State of California, alleging that Intuit misled consumers regarding the existence of a Free File product that it was obligated to provide for free to all individuals below a certain income threshold, and instead steered them to another supposedly free TurboTax product that had limited eligibility and required many low-income consumers to upgrade and pay hundreds of dollars to prepare and file their income taxes. The lawsuit was brought under the California False Advertising Law.
On May 4, 2022, the County Counsel, along with the Los Angeles City Attorney, California Attorney General, and a coalition of other attorneys general, reached a $141 million settlement with Intuit. The settlement includes $11.4 million in direct restitution for approximately 370,000 Californians. It also includes substantial injunctive terms, which:
- Bar Intuit from lying to taxpayers about the necessity of upgrading from its free product;
- Require Intuit to “clearly and conspicuously” disclose in advertisements any limitations of its free product;
- Require Intuit to disclose to taxpayers at the earliest possible point in using a free product that they will not qualify for that product; and
- Bar Intuit from requiring users to re-enter data when they upgrade from a free product and then return to the free product.