Starbucks Under Fire for Unfair Practices on Mobile App
The central claim of the complaint from the Washington Consumer Protection Coalition revolves around the Starbucks mobile app's alleged tactics to coerce customers into continually adding more money to their balance than they initially intended to spend. The coalition argues that the app employs misleading design features that "trick or manipulate" users.
One key issue brought to light is the limitation on reloading Starbucks Cards within specific amounts, with a minimum reload amount of $10 (although the default reload amount is $25, and the minimum displayed is $15). This restriction poses a challenge for customers with small balances left over on their cards, preventing them from spending their remaining funds efficiently without shelling out extra bucks.
Customers also cannot use the remaining balance on their Starbucks card and pay the rest using another payment method. Instead, they are forced to reload to meet the predetermined minimum amount, perpetuating a cycle of higher-than-intended spending. For instance, if a customer has only $2 left and wishes to use this remaining balance to purchase a $5 drink, they must reload their balance to a minimum of $12.
So, either Starbucks makes more money off of customers, or the small balances go unspent. The complaint states that the company has ammassed $895M in breakerage (money customers will likely never spend) over the past five years.
The coalition's complaint suggests that these practices lead to an involuntary, subscription-like situation for Starbucks customers. The difficulty or impossibility of reclaiming funds, except through Starbucks purchases, allegedly traps consumers into perpetually reloading funds on their Starbucks Cards.
In response to the allegations, Starbucks communicated to TheStreet that they are "committed to working with the State of Washington to ensure it remains in compliance with all state laws and regulations." As the case unfolds, it will be interesting to see how Starbucks responds to the allegations and what changes, if any, are implemented to address the concerns raised by the Washington Consumer Protection Coalition.
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