They didn’t provide proof of that allegation. At least, not in this article. The consumer group alleges that Starbucks claims unused gift card balances as revenue. Are we sure they aren’t showing a liability for the respective amount? I didn’t look through their corporate filings, and the article doesn’t provide citations from public filings. Just accusations.
So, in the linked complaint (not a full lawsuit yet, btw), they cite “breakage” where Starbucks corporate makes an estimate each year as to the amount of banked gift cards they reasonably believe will never be spent. It looks like it has averaged about $185M in the last few years. This can be moved from deferred revenue to actual, and thereby improve the financials. This could theoretically be fucked with on the margins and allow execs to pocket more money, and to some extent it obviously encourages Starbucks to promote gift cards (in the broad sense) over other payment methods.
The whole complaint is odd. Starbucks obviously feels like they have a winner in this scheme, and almost everything alleged in the complaint is kinda fucky, to the point that I think it’s worth pointing out as a consumer protection issue. That said, the individual impact on any one consumer is very small and there are numerous workarounds for a slightly motivated person, and the tone of the complaint comes off kinda like pearl-clutching and paternalistic. Maybe you have to write it that way to make sure it’s taken seriously, but it’s not making for very persuasive reading.
I know I’m coming off all boot-licky, but this all seems legal. If Starbucks is disclosing the gift card amount as a potential to be moved from a liability to revenue, and if this is legal in tax laws, then this lawsuit is overreach and makes it seem like they’re just looking for a payout.
It’s been pointed out already that you can use the remaining balance of a gift card to zero it out and pay whatever is left in the order with another means of payment.
This lawsuit is describing how gift cards work. Might as well sue all merchants.
They didn’t provide proof of that allegation. At least, not in this article. The consumer group alleges that Starbucks claims unused gift card balances as revenue. Are we sure they aren’t showing a liability for the respective amount? I didn’t look through their corporate filings, and the article doesn’t provide citations from public filings. Just accusations.
So, in the linked complaint (not a full lawsuit yet, btw), they cite “breakage” where Starbucks corporate makes an estimate each year as to the amount of banked gift cards they reasonably believe will never be spent. It looks like it has averaged about $185M in the last few years. This can be moved from deferred revenue to actual, and thereby improve the financials. This could theoretically be fucked with on the margins and allow execs to pocket more money, and to some extent it obviously encourages Starbucks to promote gift cards (in the broad sense) over other payment methods.
The whole complaint is odd. Starbucks obviously feels like they have a winner in this scheme, and almost everything alleged in the complaint is kinda fucky, to the point that I think it’s worth pointing out as a consumer protection issue. That said, the individual impact on any one consumer is very small and there are numerous workarounds for a slightly motivated person, and the tone of the complaint comes off kinda like pearl-clutching and paternalistic. Maybe you have to write it that way to make sure it’s taken seriously, but it’s not making for very persuasive reading.
Thank you for the citation and explanation.
I know I’m coming off all boot-licky, but this all seems legal. If Starbucks is disclosing the gift card amount as a potential to be moved from a liability to revenue, and if this is legal in tax laws, then this lawsuit is overreach and makes it seem like they’re just looking for a payout.
It’s been pointed out already that you can use the remaining balance of a gift card to zero it out and pay whatever is left in the order with another means of payment.
This lawsuit is describing how gift cards work. Might as well sue all merchants.