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 app payments.
You're viewing a single thread.
So the lawsuit is about them declaring unspent gift cards as profit in their financial report? Way less shady than what the title suggests...
So it's not a lawsuit (yet), it's a complaint to the state attorney general of Washington accusing Starbucks of unfriendly consumer practices related to their gift cards, in part because they can recognize unspent gift cards as revenue, and also because it's instant cashflow for them even if the accounting revenue lags behind. The need to come up with a calculation for how much deferred revenue to recognize can be abused by execs to nudge the revenue higher (and with no additional costs associated with it, profit as well) and thereby improve stock price and trigger bonuses and whatnot.
The actual complaint reads as a bit of pearl-clutching ("involuntary subscription" because customers don't want to leave a balance OR talk to a real human at their local Starbucks!) , but on a the "death by a thousand cuts" model, yeah, I suppose Starbucks is being kinda dickish. The app doesn't give you as many rewards if you pay with CC, buries the other payment options a couple of layers deep in a menu, doesn't let you reload gift cards in increments equal to a purchase, doesn't let you split payment methods, and sets a high default reload so (on iOS at least) it isn't immediately visible that you even could scroll up to reload in smaller amounts.
It's sort of garden variety asshole app design meant to soft-lock customers in, but it's not really fraud in any meaningful way if someone is motivated. You add money, you get bitter overpriced coffee that your partner really likes for some reason. I prefer CHEAP, ACIDIC coffee because I did the pourover too fast on mediocre store-bought grounds that are too fine, LOL. Still, maybe worth a public scolding or some fines to get them to modify it so people can save a few bucks without diving into the finer nuances of their coffee app.
I prefer CHEAP, ACIDIC coffee because I did the pourover too fast on mediocre store-bought grounds that are too fine, LOL.
😄. Get yourself a decent burr grinder, a French press, and some Aldi oat milk (if you don't want black) and you can make as good a cup of coffee as you can get at the best coffee shops.
I normally use that same coffee in an Ikea French Press and while I won't say it's gourmet, it meets my needs for "not particularly bitter caffeine juice". Honestly, I slowed it down the next time I did a single cup pourover and that took most of the battery acid notes out of it.
I don't have a particularly sophisticated palate and still want some sugar and milk in there; I just don't like Starbucks very much and hate paying a premium for a product that I like less than my homemade half-assery. :-)
Honestly, this is exactly what I thought the complaint was going to be when I saw the headline and it's getting me thinking. Does Starbucks allow split payments between two methods. If not, that's the solution to this problem is require them to.
I end up having a bunch of gift cards to Starbucks through the year because my father in law knows I like coffee so he gets me Starbucks gift cards, not because I love Starbucks but because he can get them on Amazon. I'll have to try this out next time I'm nearing the bottom.
I will say, the stars that build up over the course of my gift card draining more than pays for the dollar or change at the end with free drinks. So it's never really bothered me that much, but now I'm curious.
No, it's not. The complaint is linked in the article, here is the first sentence:
For several years, Starbucks has subsidized its operations with significant customer cash inflows generated at least in part by using unfair and deceptive practices to manipulate its 33-million rewards program members into paying in advance for their purchase.
It goes on to describe dark patterns manipulating consumers into spending more than they would otherwise. You are describing one of the motivations for Starbucks to do so.