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TurboTax Faces Federal Consumer Fraud Class Action over Fees

San Francisco, CA: A federal consumer fraud class action lawsuit has been filed in California against Inuit – the makers of TurboTax - alleging the online version charges illegal and exorbitant fees to customers who choose to defer payment of the fees to be taken from their tax refunds.

According the lawsuit, filed in California, the TurboTax website provides customers with several options including the “Free Edition.” However, the lawsuit claims states “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 lawsuit also states that while Intuit aggressively markets its Free-Edition, which is not free, it hides from plain view its Freedom Edition, which does enable customers to e-file their taxes free of charge, at both the federal and state levels.

According to the TurboTax lawsuit, 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. Further, the complaint alleges Intuit violates federal and California law by not accurately disclosing the interest rates and finance charges for deferring payment of tax preparation fees.

Lead Plaintiffs Tasha and Fredierick Smith also claim that they used TurboTax’s online software in 2009, 2010 and 2011, and that each time they chose to defer paying the $89.90 fee for use, so that the fee would be deducted from their tax refund. The Smiths allege that Intuit charged them another $29.95 to do this, more than 34 percent of the $89.90 fee. They received their tax refund from the IRS two weeks after filing their return, which effectively meant that they “paid $29.95 for an approximate 14-day loan of $89.90,” according to the lawsuit.

The TurboTax federal class action is brought on behalf of all citizens of the US who used TurboTax Online after January 12, 2008, and who received a Refund Processing Option payment facilitated by Intuit, and who had Intuit’s feed taken from the deposit account established for the Refund Processing Option payment.

TurboTax Federal Consumer Fraud Class Action Legal Help

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Last updated on Feb-7-12

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