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Is Starbucks Pocketing Millions in Small Gift Card Balances Illegally?

Starbucks gift cardA new class action lawsuit claims that Starbucks is pocketing millions of dollars from small balances on used gift cards rather than making refunds of those amounts readily available to customers.

Under the law of some states, consumers can request cash back when a gift card’s balance falls below a certain amount. In this case, since the consumer lives in Massachusetts, that law governs requiring a refund at the customer’s option when the gift card balance falls to five dollars or less.

*MOUSE PRINT:

The complaint in this case alleges:

5. Defendant’s Gift Cards state that they “Cannot be redeemed for cash unless required by law.”

6. However, Defendant does not reveal that despite this affirmation, Defendant’s policy is that the Gift Cards are completely non-refundable and in fact have no mechanism in Massachusetts to refund the value of the Gift Cards even in situations where state law requires it.

The filing says the consumer’s lawyer was not able to get a refund of the $4.94 remaining on his client’s gift card by using the online form on the Starbucks website because that is limited to just residents of California and Oregon. A Boston Starbucks location was also called inquiring about a refund but it was denied there too. What the lawyer apparently didn’t do, however, is call the customer service number listed on the website for those in other states seeking refund assistance.

For its part, the company gave Axios the following statement:

“Starbucks is well aware of state gift card redemption requirements and has proper policies and procedures in place to honor valid gift card cash redemption requests.”

This case is similar to one we reported on in May when Dunkin’ was allegedly found not refunding small balances on its gift cards.

We’ll let you know what happens as these cases move forward.

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9 thoughts on “Is Starbucks Pocketing Millions in Small Gift Card Balances Illegally?”

  1. I experienced this at MICHAELS in Braintree where the cashier was not famIliar with the under 5.00 MA law. I asked for the manager who was familiar and did refund 4.95 to me. I asked that he make his cashiers familiar with the policy.

    Reply
  2. This is a classic gift card issue. Gift cards aren’t even really better than giving someone cash or a check, but this is also why companies love gift cards because they can lock you in.

    Unfortunately, I don’t see this class action lawsuit going anywhere. Likely Starbucks will find some step the lawyer skipped (like not calling as you suggested) and will produce some how-to guide no one in their customer service has ever read that explains how to process the refund. They may even be able to present evidence of three or four times in the last decade it was used successfully.

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  3. Gift cards are the most successful consumer scam of the last 100 years; maybe even longer. Take the universal convenience and acceptance of cash and add complexity to transactions. AND more importantly, creating “captive cash” which can only be funneled to the business named on the card. What is the attraction for the consumer, a pretty card? Common sense is not common.

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    • Not to mention the (probably) huge pile of cash the business can invest at nice interest rates between the time the cards are purchased and finally used.

      Reply
    • For some reason, people feel cash is impersonal while gift cards are not. People in my family still buy gift cards after watching hundreds of dollars lost when gift cards became useless after the business that accepted them closed. When I feel the need to make a cash gift personal, I include a note that the cash is a “gift card for X”. If the recipient doesn’t use it for “X”, I don’t care and the money isn’t lost.

      Reply
  4. I loved the article about Mouseprint in today’s Sunday NYT. May I add this example:

    The Metropoiitan Museum of Art has shrunk its boxes of holiday cards from from 20 to 15 cards, while keeping the price identical, an increase of 33.3%. This year’s boxes are identical to prior those of years, except for the “Mouseprint” number of cards.

    Reply