Thread by @propublica

1/ NEW: We got our hands on some internal @HRBlock training materials. What do they have to say regarding Free File?

“We want to send users to our paid products before the free product, if at all possible.”

We’ve been talking to insiders at @Intuit, @turbotax and @HRBlock….

2/ ...And they revealed exactly how the companies purposely contributed to the sharp decline of the use of the IRS Free File program, increasing their paying customer bases (and profits) in the process.

Some highlights:

3/ “The entire strategy is make sure people read the word ‘free’ and click our site and never use” an actually free product.

— Former midlevel @Intuit employee

4/ (In reality, TurboTax’s Free Edition guides many people to a product that costs them money. It’s only free for people with the simplest tax situations.)

And yet… here’s a viral @TurboTax ad from this year where the only word anyone says is “free.”:

5/ “The company is making money from the product, and that money is eating into the clients' refund,”

— Fmr @HRBlock veteran staffer, who called it “company policy” to steer customers away from the Free File option.

6/ Both companies employ similar tactics: They lure customers in with products advertised as “free” but that upsell them to paid products — or hit them with surprise charges.

propub.li/2Y40SG6

7/ One former marketing employee described a 2017 meeting at @TurboTax HQ. A new employee proposed customers who were found to be eligible for free file get a pop-up taking them to the free product.

The response? Laughter.

Then, the meeting moved on. propub.li/2GPzJ2U

8/ “They have ways of detecting if you’re paying too much, but they just don’t do it,” the former staffer said.

9/ It’s a profitable strategy.

Executives who have worked at the company boast on their resumes about their success in having diverted customers from “free” offerings to paying products.

10/ Say hello to one former TurboTax VP of product management.

According to her LinkedIn, she was “charged with addressing the threat posed by IRS free efile program” and “revamped TurboTax marketing strategy for low-end tax filers,” driving a “100% increase in revenues.”

11/ ….She did not respond to requests for comment.

12/ Or how about the former marketing manager who described her role as “driving new business growth” through TurboTax Free Edition “while mitigating cannibalization of our paid tax offerings.”

13/ Another sr. product marketing manager boasted that she helped develop the “monetization strategy of the TurboTax Free Edition product.” She said she applied the principles of the behavioral economist @DanAriely to enhance “TurboTax in-product upsell experiences.”

14/ In response to our q’s, Intuit and H&R Block both said they were “proud” of the Free File program and cited the fact that millions of taxpayers have used it. They didn’t address the employee accounts we’ve listed 👆🏽

👉🏽 documentcloud.org/documents/5984…
👉🏽 documentcloud.org/documents/5985…

15/ An IRS spokesman said the agency “continues to support the Free File program.”

16/ On Wednesday, @NYGovCuomo requested two state agencies to open an investigation.

Intuit’s response?

17/ “Our search and marketing practices around the IRS Free File program have been called into question. These characterizations are untrue and we look forward to sharing the facts with New York regulators.”

The company has not specified which characterizations are “untrue”

18/ Last year, Intuit’s consumer division, which includes TurboTax, reported $1.6 billion in operating income.

We’re going to keep reporting.

Keep up 👉 propub.li/2Y3KaqG

19/ Have you worked at @TurboTax, @Intuit or another tax prep company?
Talk to us 👉 propub.li/2UWmNNw

Do you call to try and get a refund, or do you think you were overcharged?
We want to hear from you 👉 Send us DMs or reply here.