Dark side of Starbucks app: Coffee giant accused of rigging payments to the tune of nearly $900 million over 5 years | Fortune
Dark side of Starbucks app: Coffee giant accused of rigging payments to the tune of nearly $900 million over 5 years | Fortune
Washington Consumer Protection Coalition complains to Washington state attorney general.
Isn't this like the whole point of gift cards etc.
They already have your money and they hope you don't spend it.
In a former life, I sold point of sale (POS) machines. We got bonuses for selling stuff like gift card add ons and the number one selling point to retailers was that some significant percentage of cards are never redeemed at all.
A decade ago, I worked on POS systems as a software engineer.
The selling point was absolutely hawking gift cards. Since we saw the data from companies, and we had a clause that gift cards expired (before the government stepped in) I remember being blown away by how many millions it was in pure profit.
Gift cards. Bleh
the number one selling point to retailers was that some significant percentage of cards are never redeemed at all.
That's not a good thing though. Companies can't recognize the money as "income" until it's spent (until the gift card money is used). Until it's income it can't be paid as dividends to investors. It's just stuck in a bank account gathering dust.
That makes the company look more sluggish. Its "working capital" has increased but income doesn't go up. So the stats look bad. No, the interest from the money sitting in the bank isn't worth it. Starbucks isn't a bank and its investors expect more.
I represent that demographic.
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.
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.
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.
Wait, is that illegal? Basically every app with in-app currency does that. My laundromat does that.
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.
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What a bizarre story.
Nice people