Starbucks Korea's "Tank Day" marketing controversy has spread, fueling consumer complaints over the company's prepaid card refund policy. Critics argue that the rule requiring customers to spend at least 60% of their card balance before requesting a refund effectively blocks refunds altogether.
According to industry sources on the 27th, Starbucks card terms currently stipulate that customers must use at least 60% of their most recent recharge amount (80% for amounts of 10,000 won or less) before they can request a refund of the remaining balance. For example, a customer who recharged 50,000 won must spend at least 30,000 won before being eligible for a refund. Consumers have responded with frustration, calling it "a contradictory structure where you have to spend more in order to get a refund as part of a boycott."
Posts certifying withdrawal from the Starbucks app and reviews of refund experiences have been spreading on social media and online communities. Some users pointed out that "the recharged amount is essentially cash, so it doesn't make sense for the company to set the conditions for returning it." A lawyer at one law firm has even filed a payment order request with the court demanding the return of unused Starbucks card balances.
As the controversy grew, Starbucks Korea eventually announced a temporary exception. From June 1 to 14, Starbucks will refund prepaid card balances regardless of usage ratio for a two-week period. Customers can apply for a refund through the Starbucks mobile app, and refunds will be paid within seven business days of application. The maximum refund amount is 2 million won per account. According to Starbucks Korea's audit report, the company's prepaid balances stood at 427.56 billion won as of the end of last year.
"Refund After 60% Use"…A System Designed to Block "Gift Certificate Discounting"
The "refund after 60% use" rule at the heart of the controversy is not exclusive to Starbucks. The same or similar standards apply to most gift certificates and prepaid cards in Korea. Major coffee franchises such as Mega Coffee and A Twosome Place, as well as Lotte, Shinsegae, and Hyundai Department Store gift certificates and culture vouchers, generally allow balance refunds after 60% or more is used. For gift certificates of 10,000 won or less, 80% must be used.
The standard traces back to the Gift Certificate Act, which was abolished in 1999. At the time, the government required that 80% or more of a gift certificate's face value be used before a balance refund could be claimed, in order to prevent so-called "gift certificate discounting" and illegal discount distribution. After complaints about consumer inconvenience, the threshold was eased to 60% and is now maintained as a Fair Trade Commission (FTC) standard contract.
The current FTC standard contract for new-type gift certificates stipulates that "in the case of monetary new-type gift certificates before the expiration date, when a customer has received goods worth 60/100 (80/100 for amounts of 10,000 won or less) or more of the value and requests a refund of the balance, the issuer must return the balance (calculated based on the purchase amount and usage ratio)." However, this is not a mandatory regulation, and companies are not strictly obliged to comply. Companies may also voluntarily operate more lenient policies.
Baedal Minjok exchange vouchers also allow cash refunds of remaining balances only when 60% or more has been used after registration. Cultureland, which issues mobile culture vouchers, also states on its website that refunds are possible if 60% or more of the gift certificate amount has been used before the expiration date. In contrast, Naver Pay Money, Kakao Pay Money, and Coupay Money allow full withdrawal of recharged balances without any usage conditions.
There is also a difference between Starbucks cards and these simple payment services. Naver Pay and Kakao Pay are classified as "prepaid electronic payment instruments" under the Electronic Financial Transactions Act, but Starbucks is essentially treated as a single merchant because all of its stores are directly operated by the headquarters. As a result, it is governed by the gift certificate standard contract rather than financial industry regulations.
FTC "Reviewing Improvements"…But "Full Refund" Faces Hurdles
In response to this incident, the FTC has begun reviewing the possibility of revising the standard contract. The key issue is whether consumers should be allowed to demand full refunds regardless of usage ratio when a company faces social controversy or moral culpability.
The current standard contract allows full refunds within seven days of purchase. After that, the 60% usage condition applies in principle. Full refunds are exceptionally permitted only when product provision becomes impossible or when a company unilaterally changes usage conditions to the consumer's disadvantage. The problem is cases like Starbucks, where consumers voluntarily begin a boycott due to social controversy. Under current rules, there is no basis for recognizing this as grounds for a full refund.
The Korea National Council of Consumer Organizations issued a statement on the 22nd criticizing that "there is no protective mechanism whatsoever for situations where consumers refuse to use a service due to a company's clear social or moral culpability." It urged the FTC and the National Assembly to improve related systems, arguing that "consumers should be able to get their prepaid funds back regardless of usage if they wish."
However, even if the system is revised, significant challenges remain. The biggest issue is the ambiguity of the standard. It is difficult to establish clear criteria for what level of social controversy at a company should qualify as grounds for a full refund.
Industry observers also worry that allowing mass refund demands based solely on a particular controversy or online sentiment could increase the burden on corporate management. There are also concerns that gift certificates could be misused as a means of cash transfer. After purchasing high-value gift certificates, consumers could use only a portion and receive a refund for the balance, creating a channel for cash conversion.
Structural differences within the franchise industry are another variable. Companies with directly operated systems like Starbucks can manage refunds at the headquarters level, but franchise-based brands may shift the on-site response burden to store owners. The FTC says it sympathizes with the need for consumer protection but will also review the impact on the industry as a whole.
Even Public Institutions Cut Ties: A Summary of the Starbucks Tank Day Controversy
