Lawsuit: Starbucks gift card policy is ‘misleading’ and discourages cash exchange

What to do with that Starbucks gift card that doesn’t have enough credit to buy an espresso coffee or a puppuccino for Fido?

How about filing a federal lawsuit?

A Boston man tried to exchange a card with a balance of $4.92 for cash at the nearest cafe. When denied, he filed a proposed class action lawsuit in the U.S. District Court in Seattle, alleging the coffee retail giant unfairly enriched himself millions of dollars by making it difficult to buy out small remaining balances on gift cards for cash, even when required by law.

Richard Spencer filed a lawsuit last month, alleging the company’s popular reloadable gift cards “include unfair, misleading and unlawful terms that are only disclosed to customers after the point of sale, or never disclosed at all.” everything”.

The lawsuit accuses Starbucks of engaging in “unjust enrichment” and breach of contract.

According to the lawsuit, Massachusetts is among 10 states that have laws requiring companies that issue gift cards to redeem any balance of $5 or less for cash. Washington, Oregon and California are among the western states with similar statues in the books. The fine print on gift cards indicates that they cannot be redeemed for cash, except as required by law.

The lawsuit alleges that Starbucks fails to emphasize this caveat and that company policy states that “gift cards are absolutely non-refundable.”

“These small balances add up,” the lawsuit alleges. “Defendant distributed millions of these cards to purchasers and gift card holders across the United States.”

“Thereby, [Starbucks] acquired at least millions of dollars in revenue to which it is not entitled,” according to the document.

Starbucks gift cards are among the most ubiquitous gifts given to family and friends on holidays and birthdays. The company, in last year’s earnings report, said it sold $11 billion worth of gift cards in 2021 and $12.6 billion the previous year.

Unused Starbucks gift cards contain an estimated value of $1 billion, according to media reports. The number of Starbucks cards sold exceeds the rest of the gift card industry combined, according to the company.

The company, on its website, offers a mechanism for those who live in states that require cash redemption of small balances, according to a company spokesperson. However, cardholders cannot simply walk into their nearest coffee shop and demand payment.

“Starbucks is aware of the state’s gift card redemption requirements and has policies and procedures in place to honor valid gift card redemption requests in accordance with applicable law,” the gatekeeper said. -speak in a press release. “We do not believe this claim to be substantiated and we will defend ourselves accordingly.”

The spokesperson pointed out – as did the lawsuit – that customers in California and Oregon can submit reimbursement requests online; however, those living in other “eligible states” should call Starbucks Customer Service at 800-782-7282 to see if they are eligible.

Those living elsewhere apparently have no redemption recourse.

The lawsuit asks U.S. District Judge John Coughenour to certify it as a class action, arguing that Starbucks cardholders number in the millions and the amount at stake exceeds $5 million.

Attorneys for Spencer, attorney for Issaquah Wright Noel and a law firm in Walnut Creek, Calif., did not respond to emails or phone messages seeking comment.

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