DENVER — Attorney General Phil Weiser announced that his office secured over $2.5 million for tens of thousands of Coloradans deceived into paying for tax services that should have been free.

Intuit Inc., the owner of TurboTax, reached a settlement to help remediate harms experienced by low-income consumers and military members who fell for the company’s false advertisments.

A multistate investigation with assistance from the Federal Trade Commission was prompted after ProPublica reported the use of deceptive digital tactics by TurboTax. It found that the company was steering low-income consumers toward its commercial products and away from federally supported free tax services.

“Free tax filing services are offered for a reason—to ensure lower-income Coloradans can file their taxes with as little impact to their daily lives and pocketbooks as possible,” Weiser said.

TurboTax Free File is a public-private partnership with the federal government. It is a federally supported free service through the IRS Free File Program, which allows taxpayers earning roughly $34,000 and members of the military to file their taxes for free. In addition to the File Free product, Intuit offers the commercial, “TurboTax Free Edition,” which is only free for taxpayers with “simple returns” as defined by Intuit. TurboTax marketed Free Edition through ad campaigns in which “free” was the most prominent or at times the only selling point. In reality, the product was only free for about 33% of U.S. taxpayers. In contrast, 70% of taxpayers qualify for free filing under TurboTax Free File.

The investigation confirmed that Intuit engaged in several deceptive and unfair trade practices that limited consumers’ participation in the IRS Free File Program. This included the use of confusingly similar names for both IRS Free File and what it calls its “freemium” product, TurboTax Free Edition.

Additionally, Intuit deliberately manipulated consumers’ search results to push consumers toward its paid product. According to a press release from the Office of the Attorney General, TurboTax purposefully blocked its IRS Free File landing page from search engine results during the 2019 tax filing season, effectively shutting out eligible taxpayers from filing their taxes for free. Moreover, TurboTax’s website included a “Products and Pricing” page that stated it would “recommend the right tax solution,” but never displayed or recommended the IRS Free File program, even when consumers were ineligible for the TurboTax Free Edition.

Under the settlement, Intuit agreed to pay impacted consumers about $30 for each year they were deceived into paying for TurboTax’s Free Edition for tax years 2016 through 2018. This included over 80,000 payments in Colorado alone. Impacted consumers will automatically receive notices and a check by mail.

“Through today’s settlement, we are returning some of the money that was wrongfully taken from our state’s hardworking residents,” stated Weiser. “We will continue standing up for vulnerable consumers taken advantage of by irresponsible companies.”

Additionally, Intuit agreed to suspend TurboTax’s “free, free, free” ad campaign, which forced consumers to pay despite being promised free tax preparation services. TurboTax also agreed to reform other business and advertising practices that could be misleading.

All 50 states and the District of Columbia joined this agreement, which requires Intuit to pay $141 million nationally.