• by Tanya Gazdik , January 4, 2024

Here’s the scenario: You are about to complete a Starbucks purchase on the company's smartphone app only to discover that your prepaid digital card doesn’t have enough to cover it. So you reload it in order to make the purchase. 

But you can’t load it just for the amount you need (which some companies, including Einstein Bros. Bagels allow you to do.) Instead, you are forced to reload money in $5 increments, with a $10 minimum purchase. 

It seems painless enough — you know you’ll be back for another latte down the road.

But a consumer action group is accusing Starbucks of exploiting customers, 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. 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.”

Because customers cannot reload only what they need to cover a one-time purchase, they are pushed into making future purchases, the complaint states, according to Fast Company.

“This Catch-22 traps customers in a cycle that resembles an involuntary subscription,” the complaint reads.

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 coalition filed the complaint on Dec. 19 and alleges that Starbucks uses ”dark patterns” to “trick or manipulate” its mobile app users by using multiple misleading digital design features to force customers to reload their Starbucks Cards in “inflated amounts,” per The Street.

“The Starbucks app automatically sets a default reload amount of $25 and displays $15 as the lowest reload amount even though the minimum is $10,” according to The Street.

There’s an incentive for paying on the app, according to Business Insider. Customers earn twice as many loyalty points if they pay for their orders on the app – whether in advance or by scanning it in-store – using the coffee chain's digital Starbucks Card.

Just this morning, Starbucks sent its Starbucks Rewards loyalty program members an email reminding them of such. 

“Customers also aren't able to split their payment across multiple payment methods when they order via the app and pay using their Starbucks Card – meaning they can't use up the leftover balance on their card and then pay the remaining amount using a credit or debit card,” per Business Insider. 

The Starbucks Card and its rewards program is a huge contributor to the company’s financial earnings. 

“According to the company’s 2023 fourth-quarter financial data, it reported that 43% of transactions in its U.S. stores during that quarter were from Starbucks Card users which contributed more than $2.8 billion in revenue,” per The Street. “It also reported that Starbucks' Rewards program membership reached 32.6 million users during the fourth quarter, and 57% of revenue from sales at Starbucks stores came from Rewards members.”

Meanwhile, Starbucks says it will give customers who bring their own clean cups a 10-cent discount and 25 stars if they’re members of the chain’s rewards program, according to CNN. 

While it’s a good move for the environment, that discount seems a bit trite in light of the lawsuit.