Intuit Will Face Class-Action Lawsuit for TurboTax Identity Theft

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Intuit, the company behind TurboTax, is facing a class-action lawsuit in the wake of multiple instances of identity theft during this year’s tax season.

The lawsuit was filed by two victims of identity theft, Christine Diaz and Michelle Fugatt, on Monday, April 20 in the Northern District of California.

According to the Washington Post, Diaz hasn’t used TurboTax to file her taxes since 2011, but she received a $242 bill from the software service this past March. According to the bill, her identity was used to file federal taxes and state taxes in Michigan, Missouri, Ohio, and Oklahoma.

Fugatt also stated that she received a similar bill this past March from TurboTax, despite never having used the person tax return service before.

According to reports from the Post and Forbes, both plaintiffs filed the lawsuit claiming that Intuit didn’t do enough to prevent identity theft via TurboTax, nor did it attempt to inform the victims of these security breaches that their personal information and tax returns had been compromised.

Many Americans use TurboTax for filing personal taxes, while businesses typically seek help from professional accountants and finance management teams. (Nearly half of all small businesses reportedly spend at least 80 hours on federal taxes alone, so it’s not hard to see why most businesses would opt out of doing their own taxes.)

Granted, independent tax return services tend to offer more in terms of personal security, and consumers who are especially concerned about identity theft are often in better hands when they seek tax return help from a professional firm rather than an online software program. Nevertheless, as this case proves, it’s possible for taxpayers to be harmed by Intuit’s negligence even if they refuse to use TurboTax.

The lawsuit is still in its initial stages and nothing has been confirmed yet, but the Post states that Richard McCune, a lawyer involved in the case, is seeking to make this a class-action lawsuit so that any other victims of identity theft (via TurboTax) will be able to collect damages.

TurboTax reportedly found that 60% of all suspicious tax return forms were submitted by hackers who obtained someone’s personal information elsewhere, while 40% of suspicious claims came from hackers who broke into customers’ existing TurboTax accounts. Furthermore, the service was shut down temporarily for 24 hours this past February due to a “spike in suspicious tax returns.”

Intuit has argued that it cannot be held responsible for 100% of preventative tax fraud strategies, but it will be up to the FBI, the Department of Justice, and the U.S. Legislature to determine if the company is responsible for protecting taxpayers more than it has.

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