Consumer group takes issue with Starbucks over app and gift cards

From Fortune:

A consumer action group has accused Starbucks of exploiting customers via its gift card and app payments. The Washington Consumer Protection Coalition has called on the state attorney general to investigate whether the company’s policies violate consumer protection laws. Starbucks allegedly rigs its payment platform to encourage consumers to leave unspent money on their cards and apps.

According to the group, Starbucks’ mobile app and digital payment cards are akin to an “involuntary subscription” as customers can only reload money in $5 increments, with a $10 minimum purchase, preventing them from reaching a zero balance. The complaint alleges that Starbucks has claimed nearly $900 million in unspent gift card and app money as corporate revenue over the last 5 years, boosting corporate profits and inflating executive bonuses.

Starbucks has not commented on the complaint, but the group alleges that the company’s policies are preventing customers from ever reaching a zero balance, meaning Starbucks pockets more of the customer’s money. The Coalition concedes that customers can reload their accounts in stores for a custom amount of $5 or more, making it easier to hit a zero-balance.

The Starbucks app has become increasingly important for the company, with drive-through and app orders making up the majority of the company’s purchases. The Coalition is requesting that the state attorney general investigate the company’s policies to protect consumers from exploitation.



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