At Annual Meeting, Starbucks to Tout Socially Responsible Reputation, Yet Stifles Consumer Rights

March 21, 2012 

At Annual Meeting, Starbucks to Tout Socially Responsible Reputation, Yet Stifles Consumer Rights

Statement of Christine Hines, Consumer and Civil Justice Counsel, Public Citizen’s Congress Watch Division

Today, Starbucks is holding its annual shareholder meeting where reportedly the company will emphasize its good corporate citizenship and values. However, these values are absent from the terms of service of Starbucks’ prepaid gift card, which suppresses its customers’ fundamental legal rights.

Buried in Starbucks’ fine print are a forced arbitration clause and class-action ban that strip consumers of their right to go to court over disputes and funnels them into secret, individual arbitration where, typically, corporations write the rules for the process – often in their favor. The costly process provides extremely limited opportunity to appeal decisions. Meanwhile, the ban on class-action lawsuits is a boon for Starbucks because class actions are often the only effective way that a business will face repercussions for abusive corporate practices, particularly in cases where small individual actions are not feasible. In all, these terms ensure that very few, if any, consumers are able to bring valid claims against the company.

Starbucks is not alone. Increasingly, forced arbitration clauses and bans on class actions are appearing in every feasible type of consumer contract – cell phones, nursing homes, credit card, deposit accounts, payday loans, home construction, and even within the terms of service for video games and e-commerce sites for book sellers and online video streaming.

Last month, more than 15,000 petitioners called on Starbucks to drop forced arbitration from its terms of service in its prepaid gift cards. Again, we urge it to hold true to its touted reputation and to set an example of responsible corporate behavior by restoring its customers’ legal rights and eliminating forced arbitration from its contracts.

For a sampling of companies that use forced arbitration and class action bans, visit: https://www.citizen.org/rigged-justice-rogues-gallery

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Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org