erikbianchi.com: [OT] Electronic Arts is Stealing from Customers!

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June 30, 2005

[OT] Electronic Arts is Stealing from Customers!

Electronic Arts is overcharging on taxes slipping in an extra 25 cents or more on the cost of your video game purchase!

A very good friend of mine recently purchased Battlefield 2 from Electronic Arts directly and realized that they charged him too much on tax.

California state law says (paraphrasing) "when an item is purchased online but from within the same state that the taxes paid is based on the purchaser’s address and not the sellers". However, Electronic Arts is refusing to credit him the 25 cents they overcharged him as they charged him their districts tax rate which is higher then his. They are offering to refund his purchase if he returns it but he no longer has the original packaging which means he would have to pay for shipping.

To clarify, California State Tax is 7.25% and then each county / district adds their own tax on top of that. San Francisco Bay Area is 1% while Orange County is only .5% which makes Orange Country’s total tax rate 7.75% and the San Francisco Bay Area 8.25%. If the item was purchased in Orange County but was shipped from San Francisco only Orange County’s tax rate of 7.75% would apply.

Granted, 25 cents isn’t much but say that 100,000 people where over charged. That total comes out to EA making an extra $25,000 from “taxes” that they are not held liable for (and I wonder where that money goes). Bottom line, what EA is saying is that he either has to deal with losing 25 cents or he has to cough up the shipping charges. Which is very unethical and a deceiving business practice.

I would think that a company as large as EA would act more responsibly to their customers, know how the tax laws work and have better customer service training (or at least have their reps read each others responses). As you’ll see in the support incident below some responses from EA reps are completely inaccurate and contradict what the other rep had just said or what they themselves had said in a previous response.

Support incident below. Names, emails addresses and other private information have been edited out:

EA Online Support
Customer 06/22/2005 06:28 PM

Dear EA Support,

I was charged too much tax on my Batllefield 2 purchase. I was charge 8.25% and tax here in Orange County (CA) is 7.75%

Thanks,

[Customer]

Response ([EA Rep 1].) 06/24/2005 04:29 PM

Hi [Customer]

Thanks for contacting EA Online Support.

Please be informed that following is the sales tax that applies to California: CA - 8.25%

Also, tax will be assessed based on customer's shipping address. We will collect tax on the subtotal amount of the order.

If there is anything else we can do to help, please let us know.

Thanks for your interest in EA.

Take care,
[EA Rep 1]

Customer 06/26/2005 03:51 PM
8.25% is not the standard sales tax rate for all of California. In fact in some counties they have a tax rate of 8.75%. I live in Orange County, so my tax rate is 7.75%

CALIFORNIA AND NEVADA SALES TAX RATES:
http://www.biz2bizonline.com/13ge2_02.htm

please send me a check for a tax refund.

Thanks,

[Customer]

Response ([EA Rep 2].) 06/28/2005 11:00 AM
Greetings,

Thank you for contacting Electronic Arts.

Tax is charged based on the location of the EA Office in the State, not the shipping location. Our office is located in the Bay Area so that is the tax rate that is charged for any orders within California.

If you have any further questions or concerns, feel free to reply to this email. Our Quality Service Representatives are available Monday-Friday 8:00 am to 5:00pm PST.
Thank you,
EA.Com The Place to Play

Customer 06/28/2005 01:53 PM
Dear EA:

California State tax law says that sales tax will be charge according to where the resident lives not where the item purchased was shipped from. (http://www.boe.ca.gov/pdf/pub44.pdf)

A good example of this is set when an individual lives outside the county or city. State sales tax is only 7.25% county tax is added to the resident for which he or she resides in. The BAY area adds 1% tax for sales to residents in their county. Orange County only adds .50% sales tax. So the total tax should have been 7.75%

It would be best for EA.com to try to resolve the issue with a single customer before this becomes a statewide class action.

Please forward this to your management

[Customer]

Response ([EA Rep 2].) 06/29/2005 05:03 PM

Greetings,

Thank you for contacting Electronic Arts.

What I listed is how I believe it works however it may be different. The Item was not shipped from our location in California so it is not charging you based on the shipping location where it was sent from.

We can not submit a Credit Request for the Tax listed, however if you would like a refund please return the package to UPS and ask them to return it to the sender. Once we receive it the Charges will be returned to the card used to order . You can then re-order it or get it from a local retailer that has your standard tax rate.

So given EA Rep 2's latest response where did this magic 8.25% tax rate come from? 8.25% would be the tax rate for SF Bay area as he had stated in an earlier response. However, his latest response now says that the tax rate was not based on where the item was shipped from and there is not much he can do.

Unfortunately for EA they have no way of issuing a refund for an over tax so they must bare the burden of having all that extra cash.

-erik

Posted by erikbianchi at June 30, 2005 05:14 AM

Comments

Strike two for EA!

After the whole EA wife public thing, this. EA just doesn't seem to know how to interact with human beings...

Now if only they could ship games that don't necessitate a patch to run...

Posted by: lpmaurice at June 30, 2005 05:59 AM

For those who haven't seen it, the EA Spouse Letter:

http://www.livejournal.com/users/ea_spouse/274.html

I've actually worked (past tense) at places like that. =(

-erik

Posted by: erikbianchi at June 30, 2005 07:10 AM

Over here (The Netherlands) VAT is 19%, so stop complaining ;). We also pay like 40%-50% tax on our income. And a a gallon of petrol cost about $6.60 here.

I know this is not really your point. If it was me I wouldn't make an issue of $0.25. It probably has something to do with administration costs (it would cost them too much trouble to adept taxes to local rules).

Posted by: McVirusS at June 30, 2005 09:16 AM

McVirusS: America is a land of consumers via capitalism, and as such, we play hard ball when it comes to monetary exchanges. It may seem ridicolous to spend inordinate amounts of time discussing 25 cents when someone like you has a good appreciation for just how well off we Americans have it.

However, many of us question why we have to spend $50 for a game that doesn't run out of the box, has a plethora of bugs, and blue-screens our computer... only to be somewhat fixed 6 months later.

If EA were to spend that money either lowering the price of the game to set expectations, or putting that towards the QA budget, then blog posts like this wouldn't be prevalent.

Posted by: JesterXL at June 30, 2005 02:05 PM

McVirusS - that attitude is what EA, and other companies, count on. People may complain, but most won't so overall they "win". It's disgusting that the thought process of the people that run these companies is to measure success in a game of numbers. Where it's ok if a certain percentage of people are not happy, as long as a greater percentage pay us.

It's actually easy to bash EA since they are the perpetrators. How about the millions of people that buy their products? Of course most people don't know, but I bet a lot of people also don't care. They'll buy the game even though they've read/heard the stories.

In the end we'll be left with little choice as monopolies become more prevelant. Although I use monopoly here, not as one company owning everything, but a few companies following each others' lead so that workers have little to no choice.

Right now, consumers and programmers still have a choice.

Posted by: Derek Vadneau at June 30, 2005 03:36 PM

McVirusS,

I can appreciate what you are saying and am thankful taxes aren't that high over here yet. We do have to pay taxes on pretty much everything though (goods and services, income, profit resulting from a sale, etc) and have recurring taxes (property tax, car tax, etc).

But no it's not about the extra 25 cents. Heck if the game cost another 5 bucks I really wouldn't care. But in this case the game is advertised at 1 price and tax should be at another percent. However, they are incorrectly overcharging on the tax and not willing to do much about it.

When EA goes to file their taxes they won't be held liable for the amount of tax they over charged and will be able to pocket that money (and who knows how / if they report this financial gain at the end of the year).

It's just a very unethical thing to do and is about the principal of the matter and not the monetary loss. It's small abuse like this, where large companies take advantage of the consumer (and in some cases employees) that end up turning into the Enrons and Adelphias.

-erik

Posted by: erikbianchi at June 30, 2005 05:29 PM

[BEGIN QUOTE]I know this is not really your point. If it was me I wouldn't make an issue of $0.25. It probably has something to do with administration costs (it would cost them too much trouble to adept taxes to local rules).[END QUOTE]

Just for the record, it’s not about the money... Think outside the BOX! This issue was simple customer service that could have been resolved in a nice way.

I filed a complaint with the state. EA will now under go an state tax audit by investigators for defrauding customers and counties within California.

I was assured by state investigators who are working the case that EA will not keep the extra tax money.

Taxes here in california mount up to over 49% of middle class income for state, federal and city combined with sales ect.

I encourage everyone to question all companies no matter what the monitary value is when they see something wrong.

Posted by: Customer at June 30, 2005 10:48 PM

i am an idiot and i am lead by richard simmons

Posted by: idiot at July 6, 2005 03:33 PM

EA finaly agreed to allow a return shippment through UPS. What a hassel! Im not going to bother returning the game. I just wanted to make things right for all southern california customers in the future.

Posted by: Customer at July 9, 2005 05:36 PM

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June 30, 2005

[OT] Electronic Arts is Stealing from Customers!

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