The global coffee giant Starbucks is facing allegations from a consumer protection group that claims that the company unfairly made a profit of $900 million through its app payment system – using a manipulative app design to maximize its profits through unspent consumer money.
According to Android Authority, The Washington Consumer Protection Coalition has requested the state attorney general to investigate Starbucks’ gift card and app payment system that directs customers to hand over more money than required.
The campaign manager Chris Carter in a statement said that customers cannot fully spend the amount they top-up into their prepaid Starbucks accounts.
“Starbucks rigs its payment platform so consumers are encouraged to leave unspent money on their cards and apps,” said Carter
“A few dollars here and there left on a payment platform may not sound like a lot, but it adds up. 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,” Carter added.
“Customers loaded roughly $15 billion onto Starbucks Cards last year, and the company relies on these funds as a source of interest-free operating capital. The company has, therefore, a powerful incentive to maximize the funds flowing onto the Payment Platform, and in fact, seeks to maximize this flow by using several manipulative digital design features on its mobile app,” The group noted in its formal complaint.
On the other hand, Starbucks has dismissed the claim made by the consumer protection group stating to Fortune (paywalled) that customers are free to spend all of their app money with whatever balance is left in their app or gift card and paying the remaining amount in cash at any Starbucks store – reaching zero balance.
A Starbucks spokesperson Sam Jefferies told Fortune that the company “is committed to working with the State of Washington to ensure it remains in compliance with all state laws and regulations.”
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Wow, this is really concerning. As a frequent Starbucks customer, I had no idea they were allegedly rigging millions of dollars in consumer funds. It’s unacceptable that any company would engage in such unethical practices. I hope the Consumer Watchdog Group continues to investigate and bring justice to those affected. #starbucks #consumerprotection #ethicalpractices