TurboTax Faces Three Active Lawsuits in 2025, $141M Free Filing Case Closed, But New Data Breach and Privacy Claims Could Pay $2,500 Per Person
Three separate TurboTax class action lawsuits target Intuit in 2025, with the landmark $141 million free filing settlement already finalized—checks of $29 to $30 were mailed to 4.4 million consumers in May 2023, making new claims impossible. However, two active 2025 cases remain open: Morgan & Morgan’s fraud lawsuit alleging Intuit facilitated fraudulent tax filings by ignoring millions of compromised accounts, and Labaton Keller Sucharow’s privacy violation claims against Twilio for improperly tracking TurboTax users through embedded software, with eligible claims worth up to $2,500.
Victims who never used TurboTax but received fraudulent bills, users who had returns filed in their names, or anyone who used TurboTax within the last three years may qualify for current litigation.
What Is the TurboTax Class Action Lawsuit About?
The $141 million multistate settlement resolved allegations that Intuit misled low-income taxpayers between 2016 and 2018 about free filing options. Approximately 70% of taxpayers qualified for the IRS Free File Program, yet less than 3% used it due to Intuit’s deceptive tactics.
The Federal Trade Commission found that Intuit used “free, free, free” advertising while two-thirds of tax filers couldn’t actually use the free product. TurboTax customers who earned 1099 income, farm income, or filed state returns were ineligible for the advertised free version, forcing them to pay despite Intuit’s marketing claims.
All 50 states and the District of Columbia investigated how Intuit bid on paid search advertisements to redirect consumers searching for the IRS Free File product to TurboTax’s commercial “freemium” version instead. Intuit even blocked its IRS Free File landing page from search engine results during the 2019 tax season, effectively preventing eligible taxpayers from finding the free service.
Who Can File Claims in Active 2025 TurboTax Lawsuits?
For Morgan & Morgan’s Fraud Lawsuit: You may qualify if you:
- Received a bill from TurboTax even though you never used the software
- Had someone file a fraudulent tax return in your name through TurboTax
- Were double billed by TurboTax, with one charge stemming from a fraudulent filing
- Had your Social Security number, birth date, or financial information compromised
- Continue to face increased risk for identity theft due to TurboTax security failures
For Labaton Keller Sucharow’s Privacy Violation Claims: You may qualify if you:
- Used your TurboTax account within the last three years
- Live in eligible states including California, New York, Virginia, Alabama, Arkansas, Connecticut, DC, Georgia, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Utah, or West Virginia
The privacy lawsuit alleges TurboTax embedded Twilio’s tracking technology (software development kits or SDKs) that collected and shared sensitive user information without knowledge or consent, building “comprehensive digital dossiers” on customers.
Current Status of TurboTax Lawsuits in 2025
$141 Million Free Filing Settlement (Closed): Checks were automatically mailed to 4.4 million eligible consumers in May 2023 without requiring claim forms. Most recipients received $29 to $30, though some who filed for all three covered years (2016, 2017, 2018) received approximately $85. This case is permanently closed—no additional claims can be filed.
Morgan & Morgan Fraud Lawsuit (Active as of July 2025): The law firm’s website actively recruited potential class members in July 2025, indicating ongoing litigation. The case alleges that when Intuit employees identified millions of TurboTax accounts being used solely for fraudulent tax filings, company management allegedly forbade workers from flagging or deactivating the accounts.
Security experts reportedly told Intuit to add basic safety measures years before they were implemented. The lawsuit claims Intuit facilitated identity theft and fraudulent tax returns by allowing cybercriminals easy access to residential addresses, birth dates, Social Security numbers, bank account numbers, and financial information.
Labaton Keller Sucharow Privacy Violations (Active): The firm currently represents clients in individual arbitration claims against Twilio for violating federal and state privacy laws. Eligible claims may be worth up to $2,500 per person. The case alleges Twilio’s SDK technology, integrated into over 11,000 applications including TurboTax, logged in-app activities, search terms, and navigation patterns.
What Evidence Supports the Fraud Claims?
A 2018 settlement involving TurboTax account takeover attacks affected approximately 915,000 victims. The case was preliminarily approved on October 4, 2018, establishing precedent that Intuit’s security practices harmed hundreds of thousands of customers.
In 2015, federal authorities began investigating after reports of widespread fraudulent filings early in the tax season. Nineteen states noticed an increase in suspicious activity related to tax filings, with Alabama tax officials identifying as many as 16,000 suspicious tax returns through TurboTax, while Minnesota stopped accepting individual tax returns transmitted through TurboTax entirely.
The fraud lawsuit claims Intuit allowed fraudsters to create fake TurboTax accounts to file fraudulent returns in third-party names, including people who never used the software. One plaintiff received a $242 bill from TurboTax in March 2015 even though she last used the software in 2011.
How the Free Filing Settlement Changed TurboTax Forever
Under the $141 million settlement terms, Intuit must:
- Clearly disclose when a product is not free
- Stop misleading advertising campaigns including the “free, free, free” commercials
- Make its IRS Free File version more visible to taxpayers
- Never display or recommend paid products on pages that don’t also prominently feature the IRS Free File program
- End confusingly similar names for its commercial “freemium” product and the IRS Free File service
These changes aim to prevent the deceptive marketing that sparked the multistate investigation. Regulatory agencies now use this settlement as a basis for increased scrutiny of the entire tax preparation industry.
Projected Compensation for Active 2025 Cases
Privacy Violation Claims: Eligible claims may be worth up to $2,500 per person based on individual arbitration outcomes and circumstances. The exact amount depends on how many people file valid claims and the arbitrator’s assessment of damages.
Fraud and Data Breach Claims: Compensation amounts remain undetermined as the Morgan & Morgan case proceeds through litigation. Past meningioma settlements have averaged over $800,000 for serious injuries, but TurboTax fraud claims involve different damage calculations.
The 2018 fraud settlement provided relief to approximately 915,000 victims, though specific individual payment amounts were not publicly disclosed. Legal experts project compensation will depend on:
- Extent of identity theft and financial harm
- Time spent rectifying fraudulent filings
- Credit score damage and loan application rejections
- Ongoing monitoring costs for compromised information
- Lost tax refunds or penalties from fraudulent returns
What Damages Influence Settlement Value?
Key factors determining individual compensation:
For Fraud Claims:
- Direct financial losses from fraudulent tax returns
- IRS penalties or interest due to filing delays
- Identity theft remediation costs including credit monitoring
- Lost wages from time spent resolving fraudulent filings
- Emotional distress from ongoing identity theft risk
- Attorney fees and legal costs
For Privacy Violation Claims:
- Number of years TurboTax was used during the tracking period
- State of residence (some states have stronger privacy protections)
- Type and extent of personal information collected
- Harm from targeted advertising or data sharing
- State consumer protection law violations
Victims who never used TurboTax but received fraudulent bills face unique damages, as they had no relationship with Intuit yet suffered identity theft and billing harassment.
Timeline of TurboTax Legal Battles
February 2015: Class action lawsuit filed (Christine Diaz and Michelle Fugatt v. Intuit Inc., Case No. 5:15-cv-01778) in U.S. District Court for the Northern District of California alleging Intuit facilitated identity theft and fraudulent tax returns.
April 2016: Intuit requested arbitration arguing plaintiffs agreed to arbitrate disagreements through Terms of Service.
October 2018: Preliminary approval of class action settlement related to hacker access on TurboTax platform affecting approximately 915,000 victims.
2019: ProPublica report exposed deceptive tactics steering low-income tax filers away from federally supported free services, triggering multistate investigation.
2022: Federal Trade Commission alleged the word “free” misled consumers, finding approximately two-thirds of tax filers couldn’t use TurboTax’s free product.
May 2022: $141 million multistate settlement announced with all 50 states and DC participating.
May 2023: Checks of $29 to $30 mailed to 4.4 million consumers automatically without claim forms required.
2024: New class action data breach lawsuit filed July 1, 2024 in California federal court alleging Intuit failed to prevent TurboTax and Credit Karma data breaches.
July 2025: Morgan & Morgan actively recruits fraud lawsuit participants on website, indicating ongoing litigation.
November 2025: Privacy violation claims against Twilio continue through individual arbitration.
Why the Twilio Privacy Lawsuit Matters
Twilio’s tracking technology raises unprecedented digital privacy concerns. The lawsuit claims Twilio embedded software in TurboTax that tracked users across apps and devices without consent, collecting data including:
- In-app activities and navigation patterns
- Search terms and form submissions
- Habit tracking and personal behavior
- Comprehensive digital profiles for targeted advertising
Privacy experts call this “surveillance under a different name” and warn the case could force companies to reveal all entities handling user data. A December 2024 California federal court ruling allowed Twilio to enforce TurboTax’s arbitration agreement against users who tried sidestepping it by suing only Twilio, potentially limiting litigation strategies.
The Twilio case parallels ongoing legal actions against Google Analytics and other tracking tools accused of violating privacy laws in Europe and the U.S. If successful, the lawsuit may force complete redesigns of data collection in mobile software and fundamentally change how consent is handled throughout the digital ecosystem.
What Documents Do You Need to File?
Essential documentation varies by lawsuit type:
For Fraud Claims:
- TurboTax bills or invoices showing charges for services you didn’t use
- IRS correspondence confirming fraudulent tax returns filed in your name
- Credit reports showing fraudulent accounts or inquiries
- Police reports documenting identity theft
- Bank statements showing unauthorized TurboTax charges
- Time logs documenting hours spent resolving fraudulent filings
- Correspondence with IRS or state tax agencies
For Privacy Violation Claims:
- Proof of TurboTax account usage within the last three years
- Screenshots of account activity or login history
- Email confirmations from TurboTax
- Tax return copies showing TurboTax was used to file
- State residency documentation
Both lawsuits may require witness statements from IT professionals, identity theft experts, or tax preparers who can verify harm suffered.
How Long Until Settlements?
The $141 million free filing settlement provides a timeline reference. The settlement was announced in May 2022, with payments distributed in May 2023—approximately one year later.
For active 2025 lawsuits, timelines depend heavily on:
Fraud Lawsuit Progress:
- Discovery phase completion
- Class certification approval
- Bellwether trial selections
- Intuit’s settlement negotiations
Privacy Violation Arbitrations:
- Individual arbitration hearing schedules
- Twilio’s defense strategy
- Arbitrator rulings setting precedent
- Coordination among multiple claimants
Legal experts estimate fraud settlements may emerge within 18-36 months if Intuit seeks to avoid trial. Privacy violation arbitrations could resolve faster—potentially within 12 months for early claimants—though outcomes vary significantly.
Similar Tax Preparation Lawsuits Provide Context
A 2013 class action settlement over TurboTax’s Refund Processing Service (Smith v. Intuit Inc.) paid consumers who were charged fees for deducting TurboTax costs from tax refunds between January 2008 and May 2013. Class members who submitted claim forms received more than $10 on average from the $6.55 million settlement.
H&R Block faced a Texas class action (Haese v. H&R Block) involving approximately 300,000 plaintiffs who received rapid refunds. The case forced H&R Block to disclose kickbacks for arranging loans between tax preparation clients and predatory lenders.
These precedents show tax preparation companies face ongoing scrutiny for deceptive practices, hidden fees, and inadequate data security. The TurboTax litigation pattern suggests the industry requires stronger regulatory oversight and consumer protection enforcement.
What Legal Experts Say
Consumer protection attorneys believe the fraud lawsuit has strong merit given documented security failures affecting nearly one million victims in 2018. The allegation that management forbade employees from flagging fraudulent accounts—if proven—could establish willful negligence or reckless disregard for consumer safety.
Privacy law experts see the Twilio case as groundbreaking because it challenges the invisible frameworks inside mobile apps that enable third-party data collection. Courts rarely examine SDK technology operations, making this case particularly significant for establishing boundaries on tracking without explicit consent.
The closed free filing case demonstrates government enforcement can succeed against deceptive marketing. The settlement’s ongoing compliance requirements show regulatory agencies now demand transparency in how “free” products are advertised and delivered.
FAQs About TurboTax Class Action Lawsuits
Can I still file a claim for the $141 million TurboTax settlement?
No. The free filing settlement is permanently closed. Checks were automatically mailed to eligible consumers in May 2023 without requiring claims. No additional claims can be filed for that case.
What lawsuits against TurboTax are currently active?
Two active lawsuits: Morgan & Morgan’s fraud case alleging TurboTax facilitated fraudulent filings and identity theft, and Labaton Keller Sucharow’s privacy violation claims against Twilio for tracking TurboTax users without consent.
How much compensation can I receive from current TurboTax lawsuits?
Privacy violation claims may be worth up to $2,500 per eligible claimant. Fraud and data breach compensation amounts remain undetermined as cases proceed through litigation.
I never used TurboTax but received a bill. Can I file a claim?
Yes. Morgan & Morgan’s fraud lawsuit specifically includes people who never used TurboTax but received fraudulent bills or had returns filed in their names. This suggests your identity was stolen and used to file fraudulent tax returns through TurboTax.
Do I need a lawyer to file?
Most attorneys handling these cases work on contingency—no upfront costs, payment only if you win. Contact Morgan & Morgan for fraud claims or Labaton Keller Sucharow for privacy violations directly through their websites.
What is the filing deadline for current lawsuits?
Statutes of limitations vary by state and claim type. For fraud claims, the clock typically starts when you discovered the fraudulent activity. For privacy violations, claims must involve TurboTax use within the last three years. Consult an attorney immediately to preserve your rights.
What happened to the data breach lawsuit filed in July 2024?
The data breach lawsuit filed July 1, 2024 in California federal court remains in early litigation stages without settlement announcements. Cases typically take 2-4 years to resolve.
Next Steps for Filing a Claim
1. Determine Which Lawsuit Applies: Review eligibility criteria for fraud claims (fraudulent bills or filings) versus privacy violations (TurboTax use within last three years).
2. Contact Appropriate Legal Representation:
- Morgan & Morgan for fraud and identity theft claims
- Labaton Keller Sucharow for privacy violation arbitrations
3. Gather Documentation: Collect all evidence of harm including fraudulent bills, IRS correspondence, credit reports, and proof of TurboTax account usage.
4. Document Your Damages: Calculate financial losses, time spent resolving issues, credit score impacts, and ongoing identity theft risks. Detailed damage documentation strengthens claim value.
5. Act Quickly: Statutes of limitations can bar claims filed too late. Even if you’re unsure about eligibility, free consultations with attorneys can clarify your rights without obligation.
6. Monitor Settlement Developments: Stay informed about case progress through attorney websites and legal news sources covering consumer protection litigation.
Legal Disclaimer: This article provides factual information about the TurboTax class action lawsuits based on publicly available court documents and news reports. It is for educational purposes only and does not constitute legal advice. Case details are based on allegations and court filings, which may not represent final determinations. Filing deadlines and eligibility requirements may vary. For legal advice regarding your specific situation or claim, please consult with a qualified attorney.
For more consumer protection news and settlement updates, see our coverage of the Capital One $425 million data breach settlement, identity theft legal claims, and bank data breach lawsuits.
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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