TurboTax Intuit Free Filing Investigation
Multiple investigations have been launched into claims that Intuit engineered their TurboTax software, website and advertising to make it hard for customers who were eligible for free filing to find the correct program on the TurboTax website. Intuit has been accused of purposefully defrauding low income customers by using website misdirection and “NoIndex” robot directives to hide pages from search indexes.
This may have caused thousands of customers to pay for tax filing when they were eligible for the “free filing” system set up by the U.S. government. A free tax filing program instituted by the federal government, through contracted agencies like Intuit, allows certain customers to file their taxes free of charge through websites operated by these companies. Taxpayers whose income was less than $66,000 in the 2018 tax year were likely eligible for free tax filing.
Intuit has been accused of misdirecting those customers who were eligible, to one of their paid filing programs through a number of fraudulent methods. Intuit may have collected fees from thousands of customers who were eligible for free filing and may have encouraged customers to obtain and pay for other services that they did not need.
Intuit is potentially facing several class-action lawsuits filed on behalf of consumers who may have been the victims of fraud. Other companies may also be under investigation as well but have not been named as part of the current lawsuits.
TurboTax Website Misdirection
Intuit may have gone beyond engineering difficult-to-use software. The problem appears to extend into their advertising practices which list website page information as “free filing” but when the search engine user clicks on the link, they are taken to a page for paid software. The website pages with the free filing program are not listed on search engines by design.
The free website pages have been found to have internal instructions in website programming which tells search engines not to list or “index” the pages. This practice has been determined to be a deceptive SEO practice by Google and other search companies. It has also attracted the attention of governmental agencies in the federal government, along with several state governments.
Misleading Advertisements for Guarantees
TurboTax advertising has also stated that free filing services were “guaranteed” but after website misdirection, customers had already completed their tax returns on the “wrong” platform. These customers who believed their filing would be “guaranteed” as free, may have chosen TurboTax over another service because of the advertising and then were only told about fees due at the end of the filing process.
Customers were unable to transfer information already entered to the free program and were therefor pressured into paying for the filing. TurboTax’s filing system may have also misdirected consumers to pay for tax review services that the low-income customers did not need.
Investigations Begin for Intuit TurboTax Misdirection
After consumer watchdog agency, ProPublica broke news that Intuit, along with HR Block had placed No Index instructions on website coding, several governmental agencies took notice. This has resulted in several investigations and lawsuits for advertising violations, but Intuit will also be facing class action lawsuits for defrauding consumers.
The City of Los Angeles has already filed a lawsuit against Intuit, and this may be the first of many. Several Senators have stated that they would support official inquiries and the State of New York has opened an official investigation and at least one U.S. Representative has called for IRS and FTC investigations.
Despite ProPublica’s disclosure, several weeks after the kickoff of debating within governmental organizations, Intuit had not removed all of the robot No Index instructions on all of their pages.
Customers Were Purposefully Misled
Part of ProPublica’s disclosure included internal Intuit communications which indicated that the company was “purposeful” in their action to steer customers away from free filing programs into paid services. Intuit stated that their goal was ultimately to reduce the number of people who took advantage of free filing and in fact, though more people are eligible to use free filing services, numbers have actually fallen, and most people pay to file their taxes. This includes those who are eligible for free filing due to income. This is likely why Intuit was part of a group of tax software providers who were instrumental in ensuring that for-profit companies would continue to hold the contracts and that the IRS would not invent software on its own. Intuit and other companies wanted access to lucrative customers, even if they were taking advantage of those with low incomes.
A complaint filed with the U.S. District Court for the Northern district of California which claims that Intuit breached their contract held with the Internal Revenue Service. This complaint will likely form the base for a class-action lawsuit against Intuit and may ultimately involve other companies as well. Initial complainants have been TurboTax customers, but others may have been misled as well.