You Will No Longer Need To Go To Seattle To Resolve A Starbucks Card Dispute

As things stand now, if you have a legal dispute with Starbucks about your Starbucks Card, the coffee company could force you to travel to Seattle to resolve the matter — not in court, but through the shadowy, unfair process of binding arbitration. However, Starbucks is about to adopt new policies to be more flexible about the location, and give you 30 days to opt out of signing your rights away.

The arbitration clause in the terms and conditions for using a Starbucks Card had previously stated that, “Unless you and we agree otherwise, any arbitration will take place in Seattle, Washington and will be conducted in the English language.”

Note that this condition requires both parties to agree to a non-Seattle location for the arbitration process. So whether you lived in Portland, Oregon or Portland, Maine, Starbucks could have said “tough teabags” and made you travel hundreds, possibly thousands, of miles just to have your matter heard by an arbitrator who has likely handled numerous Starbucks claims.

The Public Citizen Consumer Law & Policy Blog points out that the new terms and conditions, which don’t kick in until April 16, remove the requirement for arbitrating a case in Seattle.

Given that some cities have blocks with more than one Starbucks on them, it only seems fair that customers should be able to resolve their legal disputes more locally.

Additionally, Starbucks has added the ability to opt out of its arbitration requirement. Existing users will only have 30 days from when the new rules kick in on April 16, and the opt-out must be done in writing to:
Starbucks Card Team
Starbucks Corporation,
2401 Utah Avenue S.
MS: S-MK3
Seattle, WA 98134.

“Any opt-out received after the Opt Out Deadline (allowing three (3) additional days for mailing) will not be valid and you must pursue your claim in arbitration or small claims court,” read the new terms.

Most surprising are the arbitration-related notes in the new terms which use language that is normally reserved for critics of the process, and not multinational, multibillion-dollar companies that want to use arbitration against their customers.

In the notes at the top of the new terms, Starbucks explicitly states that failing to opt out of the arbitration clause will “Eliminate your right to a trial by jury,” and “Substantially affect your rights, including preventing you from bringing, joining or participating in class or consolidated proceedings.”

That sort of transparency runs counter to the typical corporate explanation for arbitration, which is that it “benefits” the consumer by providing an expedited process.

Except that may be the only benefit for consumers. Arbitration also limits the damages, limits the customer’s ability to join their complaint together with other similarly wronged customers, does not require the arbitrator to explain their decision, and results in no legal precedent being set.

As we’ve explained before, arbitration was intended as a way to unclog the legal system by shunting off contractual disputes to a resolution process that didn’t involve the courtroom. But the nearly century-old law that established the legality of arbitration was created at a time when most contracts were between businesses who negotiated the terms before signing; not forced upon customers who are presented with lengthy “terms of use” contracts — agreements they have no ability to amend — for anything from playing a video game to buying a cup of coffee.

We’ve asked Starbucks to explain why it changed the arbitration terms in its agreement, but have yet to hear back. If the company does reply, we will update this story.