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Financial software and services company Intuit is facing a growing number of
consumer complaints over anticopying technology included in the latest
version of TurboTax, its market-leading tax preparation software.

Intuit announced last year that versions of TurboTax for the 2002 tax year
and beyond would employ "product activation," a controversial but
increasingly common technique used by software companies to lock a copy of a
program to a specific PC.

But current and former TurboTax customers are complaining in online forums
such as FatWallet and in user ratings at online store Amazon.com that the
technology is hampering their use of the software and is prompting them to
consider alternatives, most notably H&R Block's TaxCut. Intuit
representatives say most of the reports are baseless.

Complaints center on potential problems in getting TurboTax to run after
changing PC or PC components. They also focus on concerns that years from
now taxpayers who need to retrieve information from previous years won't be
able to get older versions of TurboTax to run.

Lee Boszak, a retiree from Inverness, Fla., said he's used TurboTax for more
than 10 years but switched to TaxCut this year because he objects in
principle to product activation. "If I upgrade to a new PC or replace my
hard drive, I can't install or reinstall without calling Intuit," he said
via e-mail. "I have purchased TurboTax for many years, since it came on
floppies--this activation is a slap in the face to a loyal customer."

Instead, customers are assigned an activation number from Intuit, either by
the Internet or phone, when they install TurboTax. The activation number is
tied to the product "key" for that particular copy of TurboTax. Anybody who
tries to install the software using that product key after it has already
been activated using the number will be refused and invited to purchase a
valid license.

In most cases, customers who need to reinstall TurboTax on a new PC or hard
drive simply have to enter the original activation number they received,
Gulbransen said.

"Product activation does not prevent people who want to upgrade their
equipment or have to deal with a hard drive crash from changing their
hardware," he said. "We've heard from people who installed TurboTax right
away and then got a new PC for Christmas. For most people, they can
reactivate the product without even contacting us."

The same will hold true in future years if a customer needs to fire up an
older version of TurboTax, he said. "The bottom line is, if you hold on to
your activation key and product key, and you aren't going to have a
problem," Gulbransen said. "That's why we're suggesting that people keep
those numbers with the product disc in the same place they keep a copy of
their printed tax return from that year."

But TurboTax user Joel Bradford, an educator from Eugene, Ore., said it
wasn't that easy for him when he switched PCs last month. After removing
TurboTax from his old PC, he was unable to reinstall it on the new one, and
Intuit customer support offered no help.

"I tried contacting Intuit through the online tech support," he said in an
e-mail interview. "The...representative was nice enough, but he offered no
other solution than for me to buy a new license. I had the same experience
with the senior support person (telling me) that I need to buy another
license."

Customers are also complaining about Safecast, the Macrovision security
software Intuit uses to verify activation numbers. Reports have surfaced in
discussion groups and some news sites classifying Safecast--also known as
C-Dilla for the company that provided the technology to Macrovision--as
"spyware," programs surreptitiously installed on a PC that track and report
how the PC is used. Spyware programs such as Gator and Brilliant Digital
have prompted growing concern among PC users.

"I have used TurboTax for eight years, but this year they have used a highly
intrusive, insidious spyware/registration/copy protection scheme called
C-Dilla," said a user in a comment on Amazon's product page for TurboTax
Deluxe. "They don't tell you they're going to install it, there is no option
not to install it, and there is no way to get rid of it...I won't let it on
my computer."

But Gulbransen said the complaints are unfounded. "The whole C-Dilla flap is
based on misinformation," he said. "It's never been spyware; it has no
spyware components. It doesn't monitor anything; it doesn't tell us anything
about the user, their system, their PC activity. It just checks on the
random number generated when you activate the product."

Michael Glass, senior product marketing manager at Macrovision, said
Safecast simply checks for a valid license file when a program is launched.

"It's absolutely, categorically false to call this spyware," Glass said. "We
don't send any information about the user's system to either ourselves or
the software publisher. We don't monitor what you download, which Web sites
you visit, or anything like that."

Glass invited skeptics to use firewall programs or other security software
to monitor what Safecast-enabled applications are doing with their Internet
connection. "If people don't believe us, you can take an application like
ZoneAlarm and see that it's not passing information back and forth to us or
anyone else."

While Gulbransen said Intuit isn't concerned about losing sales due to the
activation dispute, the company has compiled an extensive online FAQ about
product activation in hopes of debunking common complaints.

Competitor H&R Block doesn't use any type of activation technology for its
TaxCut software and has not made any definite plans on whether to do so with
future editions, said Chrys Sullivan, the company's director of software
products.

"We think it's an interesting development in our industry," she said. "We're
watching this closely to see how the industry reacts."

Sullivan added that H&R Block has given customers a legitimate way to use a
single copy of TaxCut on multiple PCs with a new "platinum" version that
comes with a license allowing multiple installations in a single household.

"We listened to our customers and we know that a lot of them want to be able
install the software on multiple computers in the same household," she said.
"We're glad to be able to accommodate that."