When Is Cash Not Cash? At A California Starbucks

Last October, California passed a law that cracked down on gift cards, banning expiration dates and most service fees. But it also said that retailers must allow consumers to cash in any balances less than $10.

Avoiding the question of what one could buy at Starbucks for fewer than ten dollars (I know: A couple of shorts), the law said such low balances are "redeemable in cash for its cash value." But Starbucks has been turning away California caffine-addicted consumers seeking such as cash paybacks because they have yet to update their POS software to make such efforts possible.

Even though the law has been in effect since before Halloween, Starbucks plans on waiting for its next regularly-scheduled software update to address the issue, which should happen "over the next couple of months," said Starbucks spokesperson Stacey Krum.

Until the POS updates, the chain is directing people to their customer service department, which will mail them checks. Once the POS updates are done, Krum said, stores will be able to give customers their cash.

But the law says "redeemable in cash" and not a check, right? Crumm points out—correctly—that the bill doesn't require it be cash paid at the store.

Still, doesn't it have to be cash? A hard look at S.B. 250 gives weight to the Starbucks position. Even though it quite clearly says payments will be "redeemable in cash," a definition section at the end of the document suggests that cash doesn't really have to be cash.

"For purposes of this section, 'cash' includes, but is not limited to, currency or check," said the official copy of the law. "If accepted by both parties, an electronic funds transfer or an application of the balance to a subscriber's wireless telecommunications account is permissible."

OK, so that pretty much resolves the lack of anything illegal going on amongst the coffee cups, at least insofar as low-balance gift cards are concerned. But this still raises uncomfortable questions. If the law doesn't require cash payments, why does Starbucks plan on offering them? And if it intended to offer cash, why couldn't the POS interface have been updated months ago?

Krum said the POS changes is not a new system or anything nearly that elaborate or disruptive. It's the routine GUI update to allow for new and discontinued products to be properly displayed (or not) on the employee screen.

All in all, it doesn't appear to be anything especially serious going on around here. But it does seem that Starbucks isn't taking very seriously a state law they likely never wanted to be signed.