Intuit Wants Suit Over 'Predatory' TurboTax Fee Tossed

March 20, 2012

Intuit has asked the U.S. District Court for the Northern District of California to dismiss a class-action lawsuit brought by Tasha and Fredierick Smith, who claim the company's TurboTax Online tax-preparation service charged them a "predatory" fee. When the couple used TurboTax Online to file their 2010 tax return, they chose to have the $86.90 fee taken out of their refunds. Intuit also charged them a $29.95 "Refund Processing Fee" that set up a direct-deposit account for their federal refund. According to the suit, that fee amounted to a "refund anticipation loan," a "predatory" financial instrument. "Thus plaintiffs paid $29.95 for an approximate 14-day loan of $86.90," according to the complaint, resulting in an "exorbitant quadruple-digit interest rate" that violated California's usury laws. The Smiths' suit asks the court to recognize class-action status for themselves and others who used TurboTax Online. It also seeks unspecified damages and an injunction against Intuit. However, the company has argued that the Smiths' case has no merit because the Refund Processing Service on Intuit's Web site is not a "refund anticipation loan." In its motion to have the case dismissed, Intuit said that the Smiths could have paid their tax-preparation fees with a credit or debit card but chose to deduct the cost from their returns. It also says that the plaintiffs' challenge is against "a separate fee for the second option that was charged not by Intuit, but by a third-party bank that assisted them with the transaction." A hearing on the company's motion is set for June 1.
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