What is the point of having a Starbucks gift card that doesn’t have enough balance to purchase a cappuccino for Fido or a short drip coffee?
Will filing a federal lawsuit help?
There was a case recently in U.S. District Court in Seattle where a Boston man filed a proposed class-action lawsuit. He reported that he tried to redeem a gift card with a $4.92 balance for at his nearest coffee shop.
Sadly, he was declined and he claimed that the coffee retail giant has unjustly been making millions of dollars by making it difficult to redeem small balances even though the law permits it.
The lawsuit was filed last month by Richard Spencer. He alleged that Starbucks includes unfair, deceptive, and illegal conditions that are only made known to users after purchase or never made known at all.
The lawsuit charges Starbucks with participating in a breach of contract and unfair enrichment.
The lawsuit claims that 10 states, including Massachusetts, have laws mandating gift card issuers to redeem any remaining $5 or less in cash. Western states having comparable statutes on the books include Washington, Oregon, and California. The gift cards’ fine print specifies that they cannot be exchanged for cash unless required by law.
The lawsuit accused Starbucks of failing to emphasize this warning and of failing to follow corporate policy, which states that “gift cards are fully nonrefundable.”
The lawsuit claims that “these tiny balances build up.” Millions of these cards have been given out to holders and buyers of Gift Cards across the country, according to the defendant.
According to the document, “[Starbucks] has thereby acquired at least millions of dollars in revenue to which it is not entitled.”Among the most popular gifts given to loved ones and friends for birthdays and holidays are Starbucks gift cards. According to the company’s earnings report from the previous year, gift cards were sold for $11 billion in 2021 compared to $12.6 billion the year before.
Starbucks gift cards that have not yet been used are reportedly worth $1 billion. According to the firm, more Starbucks gift cards are sold than the entire remainder of the gift card market.
According to the company spokeswoman, the company does offer a facility for people who reside in states that demand the cash redemption of minor sums on its website. However, cardholders are not allowed to simply walk into their neighborhood coffee shop and demand payment.
The spokesperson stated in a statement that “Starbucks is aware of state gift-card redemption regulations and has policies and procedures in place to honor valid gift card cash redemption requests in line with applicable law.” We reject this claim as unfounded and will respond appropriately, she said.
Customers in California and Oregon can submit redemption requests online, as stated by the spokesperson in the lawsuit, but residents of all other “qualified states” must contact Starbucks customer support at 800-782-7282 to find out if they are eligible. Apparently, those who reside elsewhere lack redemption options.
The lawsuit requests class-action status from U.S. District Judge John Coughenour, claiming that there are millions of Starbucks cardholders and that the total amount at stake exceeds $5 million.
Emails and phone calls seeking a response from the lawyers for Spencer, Issaquah attorney Wright Noel, and a firm in Walnut Creek, California, went unanswered.