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Starbucks accused of manipulating app payments for $900 million profit
- Starbucks is facing allegations from a consumer protection group that it unfairly made a profit of $900 million through its app payment system.
- The group claims that Starbucks uses a manipulative app design to maximize its profits through unspent consumer money.
- Starbucks has disputed the allegations, stating that customers are free to spend all of their app money.
Starbucks is in hot water after a consumer protection group alleged that the coffee chain profited from its unfair app payment system to the tune of $900 million over five years.
The Washington Consumer Protection Coalition has asked the state attorney general to investigate Starbucks’ gift card and app payment systems that steer customers into handing the company more money than required. The group alleges that customers cannot fully spend the amount they load into their prepaid Starbucks accounts.
“Starbucks rigs its payment platform so consumers are encouraged to leave unspent money on their cards and apps,” Chris Carter, campaign manager for the group, said 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,” 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.
Meanwhile, Starbucks disputed the allegations and told Fortune that customers can pay for their orders with whatever balance is left on their app or gift card and pay the remaining amount in cash at the store, thus reaching a zero balance.
Starbucks spokesperson Sam Jefferies told the publication that the company “is committed to working with the State of Washington to ensure it remains in compliance with all state laws and regulations.”