Washington state should protect consumers from gift card 'dark patterns' • Washington State Standard (2024)

If you bought or received a gift card in the past couple of weeks, you are not alone – consumers were expected to buy nearly $30 billion in gift cards this holiday season, according to the National Retail Federation. But what may be surprising is how many cards — billions of dollars’ worth — wind up unspent. A recent consumer survey found nearly half of us have at least one unspent gift card floating around in a drawer or lost.

While five or twenty dollars left on a gift card or payment app may seem small to some, it adds up to hundreds of millions in revenue for retailers like Starbucks. Over the last five years, Starbucks has claimed nearly $900 million in revenue from unspent gift cards and mobile app funds without providing any products or services to consumers.

In at least 11 states, including Delaware – where many big companies including Amazon are incorporated – retailers must return money from unspent gift cards to consumers through state unclaimed property programs, a process also referred to as “escheatment.” Money that isn’t recovered by individual consumers is invested in public services such as education.

But things are different in Washington state.

Twenty years ago some big business interests – including Starbucks – successfully lobbied for a loophole allowing them to keep unspent gift cards. According to a report by the Washington State Budget and Policy Center, revenue for companies from unclaimed mobile apps and gift cards exploded since 2004, when Washington companies kept just $2.7 million. This year, Starbucks alone claimed $215 million in revenue from unspent gift cards.

In fact, the 2004 gift card loophole morphed into a huge incentive for big retailers to employ deceptive and exploitative practices to drive consumers to leave money on gift cards and payment apps since they turn a profit when customers leave their money on these cards.

Brittany Furgason downloaded the Starbucks rewards app several years ago because a Starbucks ad suggested it was a convenient way to use the gift cards she received. Brittany has been reloading $25 onto the app every few weeks since then because the app’s design suggests it’s the minimum amount. She tries to spend down the entire balance but there’s always a small, unspendable amount left. She can’t combine the remaining balance with a credit card or cash, and she can’t tip that amount to her barista. Brittany doesn’t want money to sit unused on the app, so she loads more on the app. She says she feels trapped in an “unfair cycle” of being forced to spend money at Starbucks even when she doesn’t want to.

That’s why Brittany and many others just filed a consumer complaint asking our state’s Attorney General to investigate Starbucks and put a stop to these manipulative practices, called “dark patterns” by the Federal Trade Commission.

It’s a shame a few bad actors like Starbucks are exploiting consumers and our state’s special interest gift card loophole, undermining consumer confidence in gift cards and payment apps. Giant retail corporations in many other states tell consumers when they have unspent money on gift cards and give customers the option to get their money back. If unspent gift card money remains unclaimed it should be used for the public good instead of boosting wealthy corporations’ bottom lines.

As lawmakers go into a new session they have the opportunity to improve consumer protection and invest unclaimed gift card balances in the public good instead of executive bonuses and corporate profits. State Representative Emily Alvarado and Senator Yasmin Trudeau have introduced the Washington Gift Card Accountability bill package to return hundreds of millions of dollars left unspent on big retailers’ gift cards and mobile apps to consumers.

Washingtonians expect businesses to adhere to ethical business practices. We want the companies we support with our hard-earned dollars to be accountable to consumers, and to help build an economy that works for all people. And we want a level playing field where giant retailers with massive gift card programs don’t have an unfair advantage over smaller businesses.