Starbucks Settles Gift Card Lawsuit; Law Requires Stores to Redeem Gift Cards Under $10 for Cash
California Political Desk
August 22, 2009
SACRAMENTO – Starbucks Corporation has agreed to take proactive steps to follow California´s gift card law after reaching a civil settlement with three California District Attorneys.
The complaint alleged that Starbucks failed to honor customer requests to redeem store gift cards with balances of less than $10 for cash, as required by a law by Senator Ellen Corbett (D-San Leandro), which went into effect on January 1, 2008.
Starbucks has agreed to: (1) outfit all of its point of sale devices with a specific button to allow employees the in-store capability to redeem gift cards; (2) conduct employee training regarding gift card redemption procedures; and (3) post in-store signage notifying customers of their right to redeem gift cards with balances of less than $10 for cash.
"California consumers should expect businesses to comply with the law. I thank the Starbucks Corporation for cooperating with the inquiry and am pleased they will notify customers of their rights. I encourage all businesses to make sure they are also allowing consumers to redeem their gift cards," Senator Corbett said.
The settlement was reached with the Sonoma, Monterey and Shasta county District Attorneys offices. Under the terms of the settlement, Starbucks Corporation agreed to pay $225,000 in civil penalties, costs and restitution. Starbucks cooperated with prosecutors during the investigation.
Below are Frequently Asked Questions about the Gift Card Law:
Q: Are new and partially used gift cards below $10 included?
A: Yes, for example, a $5 gift card that you cannot, or do not wish to use, can be redeemed for cash.
Q: What if a store gives me a gift card for returning a product? Does the law still apply?
A: There is a difference between a store credit and a gift card. Store credit is not redeemable. However, if you are given a gift card it is redeemable for cash, below $10.
Q: Are E-gift cards included?
A: Yes, any gift card is redeemable for its cash value below $10.
Q: Are all gift cards redeemable?
A: While most gift cards are covered some cards are not redeemable because they are not regulated by the state. Here are some examples:
Gift cards issued by banks such as Visa or American Express that can be used at any store.
Mall cards redeemable at more than one store.
Gift cards donated or sold below face value to nonprofits and charitable organizations for fundraising purposes.
Gift cards that are given out as an award, loyalty or promotional program without money being exchanged.
Gift cards issued for perishable food products.
Q: What does perishable food exemption mean?
A: This exemption is for gift cards whose sole purpose is for the purchase of named perishable food, such as a holiday turkey. This means store gift cards that can be used to purchase any item in a grocery store or restaurant are covered by the law.
Q: What should I do if a retailer refuses to give me cash for my gift card?
A: First, you should ask for the manager and explain the law. If that does not work, one can write the retailer to notify them of the law and ask them to comply with it. If the store still refuses to recognize the law, one can file a complaint with their local better business bureau, take the store to small claims court or contact their local District Attorney.
The complaint alleged that Starbucks failed to honor customer requests to redeem store gift cards with balances of less than $10 for cash, as required by a law by Senator Ellen Corbett (D-San Leandro), which went into effect on January 1, 2008.
Starbucks has agreed to: (1) outfit all of its point of sale devices with a specific button to allow employees the in-store capability to redeem gift cards; (2) conduct employee training regarding gift card redemption procedures; and (3) post in-store signage notifying customers of their right to redeem gift cards with balances of less than $10 for cash.
"California consumers should expect businesses to comply with the law. I thank the Starbucks Corporation for cooperating with the inquiry and am pleased they will notify customers of their rights. I encourage all businesses to make sure they are also allowing consumers to redeem their gift cards," Senator Corbett said.
The settlement was reached with the Sonoma, Monterey and Shasta county District Attorneys offices. Under the terms of the settlement, Starbucks Corporation agreed to pay $225,000 in civil penalties, costs and restitution. Starbucks cooperated with prosecutors during the investigation.
Below are Frequently Asked Questions about the Gift Card Law:
Q: Are new and partially used gift cards below $10 included?
A: Yes, for example, a $5 gift card that you cannot, or do not wish to use, can be redeemed for cash.
Q: What if a store gives me a gift card for returning a product? Does the law still apply?
A: There is a difference between a store credit and a gift card. Store credit is not redeemable. However, if you are given a gift card it is redeemable for cash, below $10.
Q: Are E-gift cards included?
A: Yes, any gift card is redeemable for its cash value below $10.
Q: Are all gift cards redeemable?
A: While most gift cards are covered some cards are not redeemable because they are not regulated by the state. Here are some examples:
Gift cards issued by banks such as Visa or American Express that can be used at any store.
Mall cards redeemable at more than one store.
Gift cards donated or sold below face value to nonprofits and charitable organizations for fundraising purposes.
Gift cards that are given out as an award, loyalty or promotional program without money being exchanged.
Gift cards issued for perishable food products.
Q: What does perishable food exemption mean?
A: This exemption is for gift cards whose sole purpose is for the purchase of named perishable food, such as a holiday turkey. This means store gift cards that can be used to purchase any item in a grocery store or restaurant are covered by the law.
Q: What should I do if a retailer refuses to give me cash for my gift card?
A: First, you should ask for the manager and explain the law. If that does not work, one can write the retailer to notify them of the law and ask them to comply with it. If the store still refuses to recognize the law, one can file a complaint with their local better business bureau, take the store to small claims court or contact their local District Attorney.
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