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- Elon Musk's Twitter Blue subscription to the company is a major project to make it profitable.
- However, the European Union's advertised subscription prices don't include taxes.
- Insider was told by an EU consumer protection watchdog that the bloc had broken its pricing rules.
Insider was told by a consumer watchdog that Elon Musk's Twitter Blue subscription violates EU rules regarding unfair business practices.
A spokesperson for the watchdog stated that the advertised subscription prices do not include taxes. This is contrary to consumer protection laws in the 27-country union.
Twitter Blue is Musk's flagship project that aims to make the social media company profitable. It was launched in February and March to EU countries.
Twitter Blue, which is available in EU countries that use euro currency, has an advertised monthly cost of 8 euros (or about $8.50) for the app. This is slightly more than the $8 US price. For most EU users, the advertised price is 84 Euros, or approximately $88.50, as opposed to $84 in America.
The EU prices do not include value-added taxes, which are different sales taxes across Europe. For example, in Luxembourg it is 17% and in Sweden it is 25%. The US adds sales tax to the price advertised at checkout. However, the EU requires that companies advertise the total price inclusive of VAT.
This means that European Twitter users wouldn't be aware that a subscription to Stripe could cost $20 more per year, and Stripe automatically adds the tax after one or two seconds.
Insider tested the Twitter Blue subscription process both in the UK, and through a VPN in Belgium and Germany. Each instance of the subscription process was subject to 20% VAT at checkout. The UK VAT is 20%. In Belgium, it's 21% and Germany, it's 19%.
The initial price for an annual subscription in Germany was 84 Euros. However, that cost increased by 20% or 16.80 euros to 100.80 Euros at checkout. The final price was not shown before checkout.
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Subscribe to digital services such as Spotify, Netflix, YouTube, and Amazon Prime include VAT in the advertised prices for Europe.
After being contacted by Insider, a spokesperson for the European Consumer Centre (Ireland) said that they had reached out to the legal staff at ECCs throughout the EU and received responses from Belgium and Germany.
They stated that they could confirm that the pricing display and associated promotional activities were in violation of Articles 6 & 7 of the "unfair business-to consumer commercial practices" directive.
These legislative provisions, which deal with misleading actions and misleading oversights, state that "a commercial practice shall constitute misleading if it contains false or misleading information or is in any way deceives the average consumer (even if the information is correct).
This includes the "price or the method in which it is calculated," according to the legislation.
According to the spokesperson for ECC Ireland, Twitter should declare the final VAT-inclusive price when advertising pricing.
The ECC network is designed to provide advice to consumers across borders. It does not have enforcement power, which are held in the hands of individual countries' competition and pricing regulators.
Twitter Blue is available in the UK since November. Local laws require that 20% VAT be added to advertised prices.
Insider was told by people familiar with the operations of the UK's competition regulator the Competition and Markets Authority that companies who do not include VAT in their advertised prices may be violating UK consumer-protection laws.
Twitter Blue was not available for comment when the authority was contacted.
Insider asked Twitter for comments but they didn't reply.
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By: psyme@insider.com (Pete Syme)
Title: Elon Musk’s Twitter Blue is breaking European rules about unfair business practices by failing to show its full cost to consumers right away, EU agency says
Sourced From: www.businessinsider.com/elon-musk-twitter-blue-breaking-rules-unfair-business-practices-eu-2023-3
Published Date: Fri, 17 Mar 2023 12:30:27 +0000
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