Starbucks Korea probed over unregistered pre-paid cards

The company was criticised for hiding pre-paid charges from financial supervision.

South Korea’s financial regulator, Financial Supervisory Service, plans to begin a probe into the issuance of unregistered pre-paid cards by Starbucks Coffee and 50 other companies based on a list it received, Korea Bizwire reported.

Starbucks allows customers to charge their pre-paid cards through its mobile app, allowing them to receive points every time a certain amount is charged to the card. Under current laws, coffee shops are not eligible to register pre-paid systems, but Starbucks became an exception.

Rep. Hong Sung-kook from the Democratic Party said that Starbucks currently holds $153m (KRW180.1b) of pre-paid charges, which surpasses Naver Pay and Toss.

Starbucks has been criticised for being in a blind spot of financial supervision, saying that they have been depriving the means of public monitoring even when customers’ pre-paid charges are appropriated for private purposes.

Companies with unregistered pre-paid charging systems are exempt from duties to deposit the charges in an external account and disclose how they have been used.

“Starbucks card charges can be refunded at any time. The company is also subscribed to an electronic transaction credit insurance policy, guaranteeing the safety of all transactions,” Starbucks Coffee Korea said.