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The Starbucks app 'traps' customers into a 'vicious' spending cycle, consumer advocate says

Grace Dean   

The Starbucks app 'traps' customers into a 'vicious' spending cycle, consumer advocate says
  • Starbucks Cards make it nearly impossible for customers to "zero out" their accounts when they order online, a consumer advocate says.
  • Customers can only reload money and leave tips in set amounts when they use their Starbucks Cards on the app.

The Starbucks app traps customers in a cycle where they're "perpetually" adding more money to their accounts because they can't use up their remaining balance, according to a new complaint from a consumer rights group.

Starbucks customers earn twice as many loyalty points if they pay for their orders on the app – whether in advance or by scanning it in-store – using the coffee chain's digital Starbucks Card.

But the Washington Consumer Protection Coalition says that certain features of the prepaid card mean that customers are trapped in a "vicious cycle" of spending more money at Starbucks.

Customers can only reload money to their Starbucks Card on the company's app in $5 increments, with the minimum amount set at $10. This means that customers usually aren't able to add just the amount of money they need to cover just one purchase, the Coalition said.

"This Catch-22 traps customers in a cycle" because they have to add more money than they want to spend, and are left with odd amounts that they just can't use up, the group said. Plus, it's hard to get your balance on the card down to zero, the complaint says.

Customers who know they'll have a small amount left on their card after they make their purchase could leave it as a tip to empty their account – but customers only have the option of leaving tips in pre-set amounts of $0.50, $1, $2, and $5, the group said.

Customers also aren't able to split their payment across multiple payment methods when they order via the app and pay using their Starbucks Card – meaning they can't use up the leftover balance on their card and then pay the remaining amount using a credit or debit card.

When they pay in-store, however, customers have the option to split their payment method to use up the value of their Starbucks Card and then pay the rest using cash or a credit or debit card, the company told Business Insider.

The Coalition accused Starbucks of "unfair and deceptive trade practices" that it alleged violated the Washington Consumer Protection Act. "These practices trap consumers into perpetually reloading funds on their Starbucks Cards in an effort to use all remaining funds," the Coalition said.

The Coalition does note, however, that if customers reload their Starbucks Cards in-store they can choose a custom amount as long as it's at least $5.

A Starbucks spokesperson told BI that the chain is committed to working with the State of Washington "to ensure it remains in compliance with all state laws and regulations."

"The Starbucks app is the easiest way for customers to find a nearby store, check store hours, order ahead and utilize contactless payment," the spokesperson said. They noted that the company would help customers if they accidentally added the wrong amount of money to their Starbucks Card.

Starbucks' app is booming business for the Seattle-based company, with many app users placing bigger orders and paying extra to add modifications to their drinks.

The app lets customers pay in advance and avoid waiting in line – though baristas have previously told BI that it can cause delays because some drinks melt or get too cold when customers don't show up on time.