Starbucks Drops Undisclosed $1.50 Charge on Coffee under One Pound Nationally, after Massachusetts Office of Consumer Affairs, Division of Standards, Investigations
BOSTON - November 14, 2011 - Following investigations by the Patrick- Murray Administration's Office of Consumer Affairs and Business Regulation and Division of Standards, Starbucks has agreed to drop a $1.50 fee that was undisclosed to consumers purchasing bagged coffee in sizes less than one pound in its stores in the United States.
The surveys found that consumers could buy a one-pound bag of coffee broken into small sizes by Starbucks employees, but doing so incurred a $1.50 fee. The fee was not posted in the stores, and the fee was not identified on the receipt. A consumer buying a half pound of coffee that was marked as $11.95 a pound would ordinarily think a half pound would cost 50 percent of the pound price or $5.80. Instead, a half-pound of coffee that was labeled as $11.95 a pound, for example, would end up costing $7.30, instead of $5.80.
The Massachusetts agencies estimate approximately 75,000 consumers were charged the extra fee. The Office of Consumer Affairs alerted Starbucks to the lack of disclosure of the fee, and the company agreed to end the fee as of Nov. 7 in Massachusetts and across the country.
"While Starbucks, and any retailer, is allowed to charge any additional fees it wants on a product, those additional fees have to be clearly and conspicuously disclosed to the consumer before the purchase," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "We are pleased that Starbucks has decided to drop this fee, ending any confusion for consumers buying coffee in their stores."
Massachusetts has a state consumer protection act known as Chapter 93A, which prohibits "unfair or deceptive" acts or practices in trade or commerce. It is important that sellers make consumers aware of any facts that might cause them not to enter into a transaction, including any fees that would be added to the total price without the consumer's knowledge before the transaction.
After becoming aware of the fee in August, the Office of Consumer Affairs did a survey of Starbucks in Auburn, Boston, Brookline, Chestnut Hill, Chicopee, Dedham, Framingham and Holyoke, and found the fee in place at each outlet. In each case, a shopper asked for less than one pound of coffee, and in each case the $1.50 fee was not posted at the store or announced by store staff, but was included on the final receipt.
On Oct. 31 and Nov. 1, the Division of Standards, which has fining authority on instances of overcharges, inspected five stores in Andover, Bedford, Reading, Concord and Burlington. The compliance office from the Division purchased a half-pound of coffee at each location, and each time the additional fee was not disclosed before payment. Under state law (Chapter 94, Section 177), the undisclosed fee and final price to the consumer is considered an overcharge, and the Division of Standards fined the stores a total of $1,575.
Since the original investigation by the Office of Consumer Affairs, the Office has been in conversations with Starbucks, alerting officials to the state laws regarding disclosure. Last week, Starbucks agreed to end the fee in Massachusetts and other stores across the country, and early this week the company notified the Office of Consumer Affairs in writing that it had ended the fee in all of its U.S. stores.
The Patrick-Murray Administration's Department of Telecommunications and Cable regulates the telecommunications and cable industries, promotes competition, and protects consumers' interests. The Department is part of the Office of Consumer Affairs and Business Regulation, which can be found at its website, blog, and on Twitter @Mass_Consumer