Aug 12, 2022 - Business

Scoop: Man sues Starbucks in class action, claiming lack of gift card refunds

Illustration of a coffee cup with steam in the shape of a dollar sign.
Illustration: Sarah Grillo/Axios

When a Boston man's Starbucks' gift card dipped below $5 this month and he wanted a cash refund — but learned he couldn't get one — he didn't reload his card with more money.

He sued.

What's happening: In fact, Richard Spencer filed a class-action lawsuit against the Seattle-based coffee giant, alleging that Starbucks is ripping him off, and an untold number of other customers in multiple states, by not offering refunds for balances on their coffee store gift cards.

Driving the news: Spencer's lawsuit, filed late Thursday in U.S. District Court in Seattle, alleges that Starbucks hasn't established any means for customers to redeem refunds of their gift card balances in Massachusetts and at least 10 other states with laws that require retailers to do so under certain circumstances.

  • Rather, the suit alleges Starbucks only lets customers in California and Oregon get reimbursed for such balances via a website, even though the company’s reloadable gift cards are sold nationwide with language stating card balances "cannot be redeemed for cash unless required by law."
  • Massachusetts has such a law allowing customers to elect to get a cash refund when a balance on any gift certificate dips below $5, per the suit.
  • Yet Spencer's suit says after his lawyer called Starbucks and tried to get him a refund, he was denied. It alleges the coffee giant has "no mechanism in Massachusetts to refund the value of the Gift Cards even in situations where state law requires it."

What they're saying: "These small balances add up. Defendant has distributed millions of these cards to Gift Card purchasers and holders throughout the United States. Thus, Defendant has acquired at least millions of dollars in revenue to which it is not entitled," per the lawsuit.

The other side: "Starbucks is well aware of state gift card redemption requirements and has proper policies and procedures in place to honor valid gift card cash redemption requests," a Starbucks spokesperson told Axios in an email Friday.

  • "We don't believe this claim has merit and will defend accordingly," the spokesperson added.

Background: Spencer opted to file the suit after his Starbucks gift card fell to $4.94 this month and he tried to get a refund, "but found that there was no option to redeem the balance of his card for cash," per the suit.

  • His lawsuit cites as causes of action against Starbucks breach of contract and the company unfairly enriching itself.
  • The suit seeks monetary damages and legal costs and fees to be determined by the court, plus an order requiring the coffee company to comply with refund laws and "to undertake a corrective advertising campaign" about them.

Editor's note: This story has been updated to include comment from Starbucks.

Go deeper