Sarah Mirando  |  February 3, 2012

Category: Consumer News

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TurboTax class action settlementTax season is just around the corner, and many consumers will turn to Intuit’s popular TurboTax software to prepare and file their own taxes. A federal class action lawsuit filed in California may have these consumers thinking twice, however, claiming Intuit charges users for its so-called “free” online edition of TurboTax, and charges illegal and exorbitant fees to those who elect to defer their TurboTax fees to be taken out of their tax refund.According to the TurboTax class action lawsuit, customers visiting the TurboTax webpage are presented with various TurboTax Online products, including the “Free Edition.”

However, “the poorly named TurboTax Online ‘Free Edition’ is not free, for it requires additional fees (typically $19.95) to file a state return. According to Defendant’s website, ‘TurboTax Online is free until you decide to file, e-file or print your return.’ At that point, consumers must ‘purchase [the] TurboTax Online federal and state products,’” the TurboTax class action lawsuit states.

While Intuit prominently displays and aggressively markets its not-free “Free Edition,” it conceals from plain view what it calls its “Freedom Edition,” which provides actual free e-filing for both federal and state tax returns, the class action lawsuit says.

The TurboTax class action lawsuit also claims Intuit violates the Truth in Lending Act and California business and usury laws by charging “usurious,” “quadruple-digit interest rates” as fees for deferring payment to be taken out of users’ tax refunds. The class action lawsuit also claims Intuit violates federal and California law by not accurately disclosing the interest rates and finance charges for deferring payment of tax preparation fees.

For example, lead Plaintiffs Tasha and Fredierick Smith claim in the class action lawsuit that they used TurboTax’s online software in 2009, 2010 and 2011. Each time they deferred paying the $89.90 fee to use the software, and chose to have it deducted from their tax refund.

Intuit charged them another $29.95 to do this, more than 34 percent of the $89.90 fee, the Smiths claim. They received their refund from the IRS two weeks later, which means they “paid $29.95 for an approximate 14-day loan of $89.90,” the class action lawsuit states.

“The APR, properly calculated in accordance with TILA, was an exorbitant quadruple-digit interest rate. Such interest rates also violate California’s usury laws.”

The Intuit class action lawsuit is brought on behalf of all U.S. citizens who, after January 12, 2008, used TurboTax Online and received a Refund Processing Option payment facilitated by Intuit and Intuit’s fees were deducted from the deposit account established for the Refund Processing Option payment. It is seeking statutory damages, restitution, compensatory and treble damages, and injunctive relief.

A copy of the Intuit TurboTax Class Action Lawsuit can be read here.

The case is Smith v. Intuit, Inc., Case No. 12-cv-00222, U.S. District Court, Northern District of California.

UPDATE 1: A class action settlement has been reached! Learn how to file a claim for the Intuit TurboTax Class Action Lawsuit Settlement.

UPDATE 2: A federal judge granted final approval to the Intuit TurboTax Class Action Lawsuit Settlement on October 1, 2013.

Update 4/24/14: Some Top Class Actions viewers have reported they received the following update from Heffler Claims Group, the Settlement Administrator for the TurboTax class action settlement: “We are currently in the process of reviewing over 360,000 filed claims. Your patience during this process is appreciated. Checks will be mailed out upon completion of the claims review process.The amount that each claim will receive via the settlement fund has not yet been determined. This determination usually occurs once all claims have been finalized.At this time, we have no set date for fund disbursement, but we are anticipating checks to go out soon after the claims review process is completed. Please feel free to get back to us in the future.” More info: www.turbotaxclassaction.com

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103 thoughts onIntuit TurboTax Class Action Lawsuit

  1. Angelica Romero says:

    Add me

    1. Kembra S Puckett says:

      I used turbo tax in 2020 and 2021 Both times it advertised for free, I was able to complete my taxes at no charge until I wanted to file them, The site then made me pay $39 for federal and $39 for state, then to charge $78 to a bank in order to have direct . Thats false advertising and you have to pay to print and try to mail as well as efile. Very discoureging!!! my friend filed it was free but myself ,son and daughter all were charged???

  2. Samantha says:

    Wow I got 2.98 ? Waited over a year for that bs? Pathetic.

  3. J Shep says:

    Got my check and it was every bit of 17.00. SMH waited this long for 17 bucks.

  4. Jim says:

    The following message was responded to:

    Date Sent: 9/21/2014 8:10:07 AM
    Name: James

    ————————————————————————

    This is in response to your message pertaining to Inquiry for Case Status.

    The Settlement Administrator is processing all of the claims that were received. The claim payments are estimated to take place in September 2014.

    If you have any additional questions, you may contact us in writing at the address found on the website, by e-mail through the contact section of our website at http://www.turbotaxclassaction.com.

    Sincerely,

    TurboTax Class Action
    Heffler Claims Group

  5. sharp301 says:

    I haven’t heard any recent updates on this settlement yet, still waiting patiently..smh

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