A consumer action group is accusing Starbucks of exploiting customers via its gift card and app payments, forcing them to enter a spending cycle where they will never be able to fully spend the remaining balance of prepaid amounts.
The Washington Consumer Protection Coalition, a self-described “movement of everyday consumers advocating for corporate accountability,” is calling on the state attorney general to investigate whether the company’s policies violate consumer protection laws.
“Starbucks rigs its payment platform so consumers are encouraged to leave unspent money on their cards and apps,” said Chris Carter, campaign manager for the group, in a statement. “A few dollars here and there left on a payment platform may not sound like a lot but it adds up. Over the last five years Starbucks has claimed nearly $900 million in unspent gift card and app money as corporate revenue, boosting corporate profits and inflating executive bonuses.”
Starbucks spokesperson Sam Jefferies told Fortune the company "is committed to working with the State of Washington to ensure it remains in compliance with all state laws and regulations."
The group, in a 15-page complaint, alleges the platforms for Starbucks’ mobile app and digital payment cards are akin to an “involuntary subscription.” Customers can only reload money in $5 increments, with a $10 minimum purchase.
That, the group says, prevents customers from ever reaching a zero balance, meaning Starbucks pockets more of the customer’s money. The Coalition does concede that customers can reload their accounts in stores for a custom amount of $5 or more, making it easier to hit a zero balance.
Starbucks disputes this, noting that customers can pay for their purchase with whatever money remains on the app or gift card, then pay the balance in cash at the store.
The Starbucks app has become increasingly important for the company. Today, drive-through and app orders make up the majority of the company’s purchases.
This story was originally featured on Fortune.com
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January 04, 2024 at 12:53AM
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