Isn't this like the whole point of gift cards etc.
They already have your money and they hope you don't spend it.
this post was submitted on 04 Jan 2024
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I get gift cards given to me, and put them in my wallet with the best intention of using them, then after 5 years I clean out my wallet and find them. And where I live they don't expire, so I put them back into my wallet so I can not use them for another 5 years.
Wait, is that illegal? Basically every app with in-app currency does that. My laundromat does that.
This sounds like bullshit. When your card empties you can pay the rest with a credit card or cash. Starbucks doesn’t force you to reload a card, or use the card for the entire transaction price. You can even move your gift card balance to the app to consolidate multiple gift cards if you have trouble keeping up with multiple cards.
When I use the app it forces me to reload my balance, I can’t just pay what is owed. I support this investigation. Starbucks is basically forcing you to always leave a portion of unspent money on in your “Starbucks” account.
This is not my experience with the app. When the balance on my card runs out, they tell me, “it says you still owe x” and then I can pay that with a credit card.
Edit: I’m specifically talking about using the app to pay at the counter though, not to order ahead.
Chick-fil-a does this to me via online / abead orders but does let me use a credit card if I’m doing it in store. I assume Starbucks is the same.
And yet they still claimed an average of $180,000,000 a year the past 5 years that people didn’t spend.
I’m with you this is something Starbucks probably doesn’t engineer, it’s just people being dumb.
It’s definitely a dark pattern built into the app / gift card experience.
Does this include people that just use their Starbucks cards for frequent purchases? I always have up to $25 on my card for the one or two times a week I get something. That is just money I haven't spent yet, and I'm fully aware that I could just use it up if I stopped going to Starbucks.
Well… as someone who thinks he spends more money at Starbucks than is smart I’d go as far to say anyone going there is a little dumb lol
You say it sounds like bullshit, but are you disputing the article?
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.”
Are you saying this never happened? If not, where is the bullshit?
They didn't provide proof of that allegation. At least, not in this article. The consumer group alleges that Starbucks claims unused gift card balances as revenue. Are we sure they aren't showing a liability for the respective amount? I didn't look through their corporate filings, and the article doesn't provide citations from public filings. Just accusations.
So, in the linked complaint (not a full lawsuit yet, btw), they cite "breakage" where Starbucks corporate makes an estimate each year as to the amount of banked gift cards they reasonably believe will never be spent. It looks like it has averaged about $185M in the last few years. This can be moved from deferred revenue to actual, and thereby improve the financials. This could theoretically be fucked with on the margins and allow execs to pocket more money, and to some extent it obviously encourages Starbucks to promote gift cards (in the broad sense) over other payment methods.
The whole complaint is odd. Starbucks obviously feels like they have a winner in this scheme, and almost everything alleged in the complaint is kinda fucky, to the point that I think it's worth pointing out as a consumer protection issue. That said, the individual impact on any one consumer is very small and there are numerous workarounds for a slightly motivated person, and the tone of the complaint comes off kinda like pearl-clutching and paternalistic. Maybe you have to write it that way to make sure it's taken seriously, but it's not making for very persuasive reading.
Thank you for the citation and explanation.
I know I'm coming off all boot-licky, but this all seems legal. If Starbucks is disclosing the gift card amount as a potential to be moved from a liability to revenue, and if this is legal in tax laws, then this lawsuit is overreach and makes it seem like they're just looking for a payout.
It's been pointed out already that you can use the remaining balance of a gift card to zero it out and pay whatever is left in the order with another means of payment.
This lawsuit is describing how gift cards work. Might as well sue all merchants.
Is that explicitly verboten? Can you not claim unspent gift cards as revenue?
I genuinely don't know, but if it's allowed or a business's choice, then I don't know what the hell the story is here. If they are doing shady accounting practices it's one thing, but if they are just reporting their revenue/profit from gift cards...who fucking cares?
Gift cards are, by design, a way for companies to increase revenue and profit. They are known to get lost and go unspent. That's straight cash for the company. The ones that get used, get used at the company.
I'm no law expert, but I have dealt with POS and retailers, and their tax people. My understanding is that you always report the loading of a gift card as a liability. It may be categorized as a different liability because you don't necessarily owe that money back. As in, most gift cards are non refundable.
When the holder of the gift card redeems it for products, the balanced used gets deducted from your liability and is added to revenue.
If Starbucks were straight reporting it as revenue with no explanation, I can see that being scrutinized. But if they are reporting it as potential revenue, then that's up to shareholders to weed through that and make investments based on that.
I'm not understanding the illegality here.
Yea, sounds like a dumb lawsuit and clickbait lazy reporting.
This is the best summary I could come up with:
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.
“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.
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.
Today, drive-through and app orders make up the majority of the company’s purchases.
The original article contains 316 words, the summary contains 167 words. Saved 47%. I'm a bot and I'm open source!
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.
Seems pretty clear cut
Nice people
What a bizarre story.
What a stupid, utter fucking waste of everyone's time. Absolute worthless suit with no merit.