Class Action Filed Against Intuit Over Product Activation

Customers who purchased Intuit's TurboTax tax preparation software this year were surprised to find a new feature, the product activation feature, that prevents users from installing the software on more than one computer. Now those who purchased the software may be able to recover damages in a lawsuit filed against Intuit.

Intuit added the product activation feature this year to cut down on piracy of the program. The activation code that is required for running the TurboTax program matches the software with only one computer so the program cannot be copied and run on more than one computer.

Complaints began to surface as soon as the software was released. Initially Intuit told consumers they needed to purchase another copy of the software if they wanted to install it on another computer. Lately, however, Intuit has been more accommodating in aiding consumers with problems caused by the new feature. The Intuit Web site includes updated information and answers to many questions about the product activation process.

The lawsuit, filed in Los Angeles Superior Court by the law firm of Stanbury & Fishelman, seeks to recover damages for all U.S. purchasers of the 2002 versions of TurboTax products, claiming customers were misled because Intuit did not prominently display information about the activation feature on the packaging for the program.

"We feel that the mere fact that Intuit failed to disclose that, in the event of a hardware change, customers will have to call and reactivate should have been prominently displayed on packaging. Customers should have understood that before they bought the product," said H. Scott Leviant, the attorney who filed the lawsuit.

Intuit has offered an apology to customers and is researching the possibility of using a different type of product activation device for next year's program. "We're probably going to go with a much different strategy next year – it will not be memory-resident," said Tom Allanson, senior vice president of Intuit's TurboTax division.

Class action status for the lawsuit is pending. TurboTax customers cannot apply for participation in the lawsuit until the class action status is approved.

During the 2001 tax filing season, Intuit sold 5.5 million copies of TurboTax, but over 12 million tax returns were filed using the tax preparation software.

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