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Starbucks Accused of Exploitative Payments, Allegedly Gaining $900 million

starbucks faces accusations of financial irregularities

Consumer advocacy group, the Washington Consumer Protection Coalition, has accused Starbucks of manipulating its gift card and app payment system, allegedly leading customers into a spending cycle that prevents them from fully utilizing prepaid amounts. The group, advocating for corporate accountability, is urging the state attorney general to investigate whether Starbucks’ policies violate consumer protection laws.

 Unspent Gift Card Money: Coalition

According to the coalition’s campaign manager, Chris Carter, Starbucks structures its payment platform to encourage customers to leave unspent money on their cards and apps. This, the group claims, has resulted in the coffee giant claiming nearly $900 million in unspent gift card and app money as corporate revenue over the past five years. The coalition argues that such practices boost corporate profits and inflate executive bonuses.

Starbucks spokesperson Sam Jefferies responded, asserting the company’s commitment to working with the State of Washington to ensure compliance with all state laws and regulations.

Unfair Practices, Claims Involuntary Subscription Model

The coalition’s 15-page complaint likens Starbucks’ mobile app and digital payment card platforms to an “involuntary subscription.” It alleges that customers can only reload money in $5 increments, with a $10 minimum purchase, preventing them from reaching a zero balance and allowing Starbucks to retain more customer funds. However, Starbucks disputes this claim, stating that customers can pay for purchases with the remaining app or gift card balance and settle the rest in cash at the store.

While the coalition acknowledges that customers can reload their accounts in stores for a custom amount of $5 or more, making it easier to hit a zero balance, it insists that the system remains exploitative. The Starbucks app has gained increasing importance for the company, with a majority of purchases now coming from drive-through and app orders. The outcome of the potential investigation could have significant implications for Starbucks and may prompt a reevaluation of its payment practices.

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