Summary
- A class action lawsuit against TaxAct claimed the tax software company shared its users’ private financial data with third parties like Facebook and Google.
- Individuals who used TaxAct to prepare their taxes between 2018 and 2022 are part of the class and will share in a $14.95 million settlement unless they opt out.
- The deadline to join or opt out of the class is September 11, 2024, and the settlement could be finalized by the end of the year.
TaxAct will pay nearly $15 million to settle a class action lawsuit, but customers must act fast to claim their share of the settlement. Once finalized and approved by the court, this settlement will resolve a class action lawsuit against the do-it-yourself tax software giant. The TaxAct lawsuit alleged the company violated privacy laws by sharing users' personal and financial information without proper consent.
Users of the online tax preparation service who qualify as part of the class must file a claim online or by mail no later than September 11, 2024.
What Is the TaxAct Lawsuit?
Nicholas C. Smith-Washington was the named plaintiff in a class action lawsuit filed in January 2023 in California. The suit alleges that TaxAct shared users' personal and financial information with Meta Platforms, Inc. (formerly referred to as Facebook), Google and Google Double Click without the users' consent.
The plaintiff brought these claims under the California Invasion of Privacy Act, which is stronger than any federal privacy law. Although the defendants successfully transferred the case to California federal court, the U.S. District Court for the Northern District of California applied state law to evaluate whether the defendant's actions were lawful.
The lawsuit alleges that despite assurances of confidentiality on TaxAct's website, the company shared its users' sensitive personal and financial information with multiple third parties. This information included the filer's name, phone number, income, filing status, type of return, age range, employment status, investments, names of dependents and other personal identifiers.
How Does this Lawsuit Represent All Affected Users?
Smith-Washington brought his lawsuit on behalf of himself and every other TaxAct user whose data was shared with third-party advertising platforms. This type of case is called a class action lawsuit. It allows one person (or a small group of plaintiffs) to pursue a lawsuit on behalf of everyone who was similarly harmed by the defendant or defendants.
Class action lawyers help identify data breaches, consumer fraud and other violations that potentially affect large groups of people. Individually, each claim may not be worth much–certainly not enough for any one person to hire an attorney and pursue a lawsuit. However, class action lawsuits can involve thousands or millions of affected consumers. In total, their claims can be extremely valuable.
To start a class action lawsuit, the lead plaintiff(s) must prove to the court that they have a valid claim on behalf of themselves and many others who suffered similar injuries. If the court approves, they will represent this group through litigation and settlement or trial. If the plaintiff recovers compensation, the entire class shares the award, although some individuals or groups may receive more than others.
Individuals who qualify to be part of the class must affirmatively "opt out" if they wish to pursue their own legal action against the defendants for the claims in the lawsuit. Otherwise, they lose their individual right to sue for their damages, even if they never knew about the class action. (The Federal Trade Commission is investigating the effectiveness of current notification methods and exploring potential alternatives.)
Anyone wishing to opt out of the settlement must submit their request by September 11, 2024.
