Starbucks Settles in Class Action Suit That Alleged Hidden Fees

January 22nd, 2013

It is true that the frenetic pace of American life has made us a caffeinated nation. Frequenting coffee shops has not only become an ingrained part of our culture but buying fresh coffee beans has also become a billion-dollar business. With such demand for coffee beans, it is not surprising that pricing issues can arise.

Such was the case of a class action lodged against coffee giant Starbucks. Class members claimed that the Seattle based company added a hidden fee for bulk bean purchases of less than a pound (i.e. beans that were not prepackaged). The fee essentially made these small purchases higher than the advertised purchase price.

Corporate Overcharging

We find this story compelling because it is a classic example of a corporation overcharging its customers with minuscule amounts (likely $.03-$.05 per purchase), but when taken collectively, the company can make a healthy profit. It also explains why class actions are necessary. A single plaintiff would not have the means to challenge the company’s practices, and the amount in controversy would likely not be enough to merit a lawsuit. However, when consumers join together in a class action, the cause becomes a prominent issue and the company can be held accountable.

Starbucks’ Settlement

Starbucks has reportedly reached a settlement with the class for $1.7 million. It denies the allegations against it, but agreed to pay the amount to resolve the lawsuit. Class members will include consumers who purchased less than a pound of scooped coffee beans between December 9, 2007 and November 7, 2011 from any corporate-owned store in the U.S. However, half-pound purchases made between January and March 2008 (where such prices were posted) are not included in the suit.

Source: TopClassActions.com, Starbucks bulk coffee bean class action settlement, January 22, 2013