The company is “enticing” customers with the alleged giveaway, according to a complaint filed in D.C. Superior Court In 2022, creating YouTube videos inviting customers to “Come and get $50!” Or the one that features the Liberty Tax sign with a sign that says “Get $50 Now.”
“Cash in a Flash (“CIF”) is a $50 cash-only benefit for filing returns that Liberty Tax deploys to entice consumers to use its tax preparation services,” the complaint said. “However, this upfront cash actually provides no real benefit to most consumers because Liberty Tax raises the cost of tax preparation for these consumers – making Liberty Tax’s statements about CIF false and misleading.”
Liberty did not immediately respond to requests for comment. The company is the third-largest tax preparation firm in the United States, according to the Attorney General’s Office, and has two physical locations in Ward 7.
To settle the lawsuit, Liberty will pay $550,000 to D.C. customers and $200,000 in fines to the district, according to the consent order. Customers will be compensated depending on how many times they used the promotion, receiving about $42 for each CIF payment they receive, the order said.
Additionally, Liberty will cease promotion throughout the country and will be subject to probation for five years, according to the order.
“The Freedom Tax defrauded thousands of D.C. taxpayers through the false promotion of cash in a flash,” Schwalb said in a statement. “Not only does this settlement force Liberty Tax to compensate every Washington citizen it illegally benefited, it also creates strong nationwide legal barriers that will protect taxpayers across the country.”
Jorge Tormes, a senior attorney at Tzedek DC, a nonprofit legal services organization that worked with the attorney general on the legislation, said in a statement that the settlement is “extremely important.”
“The investigation…protects D.C. residents, especially working-class residents of color, from deceptive practices designed to extract wealth from the Ward 7 community,” the statement read.