TurboTax forced to stop misleading “free, free, free” ads and pay back $141M

Enlarge / TurboTax products sit on display at Costco on January 28, 2016, in Foster City, California. (credit: Getty Images | Kimberly White )

TurboTax owner Intuit "will pay $141 million in restitution to millions of consumers across the nation who were unfairly charged" and stop its "free, free, free" ad campaign "that lured customers with promises of free tax preparation services, only to deceive them into paying," New York Attorney General Letitia James announced Wednesday. Intuit is accused of steering customers away from the IRS Free File program that is free to 70 percent of taxpayers while using misleading ads to promote a separate "freemium" TurboTax product that isn't actually free to most people.

Intuit agreed to the settlement with all 50 US states and the District of Columbia. "Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to," James said in the settlement announcement. "For years, Intuit misled the most vulnerable among us to make a profit. Today, every state in the nation is holding Intuit accountable for scamming millions of taxpayers, and we're putting millions of dollars back into the pockets of impacted Americans."

Specifically, "Intuit will provide restitution to nearly 4.4 million consumers who started using TurboTax's Free Edition for tax years 2016 through 2018 and were told that they had to pay to file even though they were eligible to file for free using the IRS Free File program offered through TurboTax." Payments will be about $30 for each tax year and "impacted consumers will automatically receive notices and a check by mail," the announcement said.