A consumer rights coalition is cracking down on what it calls Starbucks’ “unfair and deceptive practices” regarding how customers use its mobile app.
The Washington Consumer Protection Coalition claims that these practices force Starbucks Rewards members using Starbuck Cards to top up their balance into paying the company more money than they intended to, according to a new complaint filed to the Washington attorney general.
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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 on its app to force customers to reload their Starbucks Cards in “inflated amounts.”
The coalition also claims that the company stops customers from spending any small balances that are left on the Starbucks Card and from emptying their accounts to zero.
The alleged “dark patterns” that the coalition highlights include Starbucks allowing customers on the mobile app to only reload their Starbucks Cards in specific amounts with a $10 minimum. Also, 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.
The claims also allege that Starbucks limits tipping on the app by not letting customers tip in custom amounts and doesn’t allow customers ordering on the app to split payments using multiple payment methods, forcing them to use only a Starbucks Card to make payments.
“Because Starbucks also makes it difficult or impossible for customers to reclaim funds from their Cards except by making Starbucks purchases, these practices trap consumers into perpetually reloading funds on their Starbucks Cards in an effort to use all remaining funds, which essentially amounts to an involuntary Starbucks subscription,” reads the complaint. “Each of these practices tends to push customers towards choices they might not have otherwise made, in violation of the Washington Consumer Protection Act’s prohibition against unfair and deceptive trade practices.”
In an emailed comment to TheStreet responding to the complaint by the coalition, Starbucks said that it is "committed to working with the State of Washington to ensure it remains in compliance with all state laws and regulations."
It also clarified to TheStreet that customers can visit a local Starbucks store to spend any remaining balance they have on their Starbucks Card by making split payments for a purchase.
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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. 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.
"As it relates to demand, it was another record-breaking quarter for key aspects of our Starbucks Rewards program: active members, spend per member, and total member spend, which all surpassed previous highs," said Rachel Ruggeri, chief financial officer at Starbucks in an earnings call discussing fourth-quarter results.
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