On Wednesday, October 25, U.S. lawmakers, led by Senator Elizabeth Warren, sent letters to major tax preparation companies, including H&R Block and Intuit, maker of TurboTax.
They asked whether the companies were still transferring taxpayer data to tech giants like Meta for use in advertising.
This comes after a warning in September from the Federal Trade Commission (FTC) about potential privacy law violations. The FTC suggested that such actions could result in fines totaling billions of dollars. The main concern revolves around the use of tracking technology from Meta and Google. The technology is embedded into tax preparation websites, sharing user details from name and address to complex financial data.
The investigation began after The Markup reported on the secretive practice in 2022. They found that tracking technology could even detect those buttons users clicked on when filing taxes, potentially revealing tax deductions and government programs used.
Meta confirmed that it uses the data for advertising and artificial intelligence algorithm improvements. However, they emphasized that their partners should not use their tools to share sensitive data. Google, on the other hand, said they prohibit businesses from uploading sensitive data to their platform.
Tracking tools are common online, but using them to transfer sensitive financial data without clear consent may breach U.S. consumer protection laws. Reports suggest that from 2011-2022, around 10 million users had their data shared without their knowledge.
The FTC warned tax preparation companies about the risks of misusing tracking pixels. Non-compliance could result in hefty fines, with each violation potentially costing $50,120.
Even though Intuit wasn’t initially the main focus due to its limited use of tracking pixels, it is now under scrutiny along with other firms. Lawmakers are seeking clarity on these companies’ use of tracking pixels and ensuring adherence to FTC guidelines.