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Starbucks, monetary superpower

jpkoning.blogspot.com

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Re: Starbucks, monetary superpower

#71

Post by kortilla »

burtonator wrote: post #65
pweezy wrote: post #50

I've always thought that the main reason for Starbucks to push their card and reward program is to save on per-transaction credit card fees. By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount. The article mentions the interchange fee (the 2-3%), but for small purchases the transaction fee is more significant. I assume the…

This is a great example of a HUGE competitive advantage Starbucks has over regular merchants that's very unfair. Smaller merchants don't get the scale advantages here...

Unfair because?

Re: Starbucks, monetary superpower

#72

Post by gruez »

joncrane wrote: post #58
gruez wrote: post #27

Earlier quoted context omitted.

How would you launder money with starbucks cards? Sure, you can transfer balances with them, but that alone doesn't help you launder money. According to the treasury dept: >First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the fin…

One method would be to buy Starbucks gift cards with the dirty money, then sell the gift cards for "clean" money at a discount from face value. There are no AML, KYC, etc regulations on Starbucks gift card balances.

>then sell the gift cards for "clean" money at a discount from face value.

This seems to be a misconception about how money laundering works. The "cleaness" of money isn't an attribute of the bill (unless you robbed a bank and they recorded the serial numbers), it's whether you can plausibly say it originated from a legitimate source. Taking dirty money, buying starbucks gift cards with them, and reselling them doesn't help you prove you got the money legitimately.

If you sell them, you still end up with cash, and any transaction records isn't going to help you. "Oh, you got this money from selling starbucks cards? Can you explain where you got $10000 worth of pre-activated starbucks cards?"

The model of a laundromat is a cash based business with high margins. You'd "buy" $10000 worth of widgets from yourself, buy $1000 worth of "materials", dump/trash those materials (so they don't pile up), then claim $9000 of profit as "clean" money.

Re: Starbucks, monetary superpower

#73

Post by dragonwriter »

gumby wrote: post #28

> But the only way to cash out of Starbucks balances is to buy a coffee--a promise that Starbucks can always keep! By the way this isn't true in California: by law all stored value and store-credit cards last for 10 years and can be cashed out.

> By the way this isn't true in California: by law all stored value and store-credit cards last for 10 years and can be cashed out.

Correction: cannot have any expiration date (not “lasts for 10 years”), service/dormancy fee, and (if purchased after 2007) must be permitted to be cashed out if the remaining balance is under $10.

https://www.dca.ca.gov/publications/legal_guides/s_11.shtml

Re: Starbucks, monetary superpower

#74

Post by gruez »

drewg123 wrote: post #48
ska wrote: post #47

Earlier quoted context omitted.

Basically anything that is directly exchangeable for cash or useful goods and services is useful for money laundering, I would imagine. If you can fill one with stolen CC details and then either cash out in a store or sell for a discount, that's a pretty basic launder, no?

Being able to cash out a gift card seems like an interesting way to get a cash advance on your credit card, without paying cash advance fees. Surely the credit card companies are on to this, and prevent it somehow?

There's a list of goods[1] that are classified as "cash-like" and are treated like cash advances when you purchase them. They don't really try too hard to crack down on this though, because there's little point. After all, you can always get a cash advance for free by going into a store and offer to pay for someone's purchase in exchange for cash (and a little discount).

[1] https://help.barclaycard.co.uk/brochure/spending_transaction...

Re: Starbucks, monetary superpower

#75

Post by kjeetgill »

modo_ wrote: post #37
Diederich wrote: post #30

15 or so years ago, my manager at WalMart Stores Information Systems Division was previously a programmer on one of the many finance related teams. Specifically, she worked with gift cards, and one time I asked her how different state laws affected how much money WalMart could recover from those cards. She was delighted to elaborate! I don't recall the particulars of the answer, but it was eye-opening. She said that…

I'm curious if a rules engine [1] could be used instead of implementing the logic in code for something this complicated? Could fuzzy logic be used to build a case when the laws become contradictory? Maybe after the case is built it could be passed on to legal counsel for approval. [1]: https://en.wikipedia.org/wiki/Business_rules_engine

Having worked with these sorts of tech/libraries before... they do little or nothing to solve the hard parts of this kinda problem, like: a) actually obtaining the requisite knowledge of all the jurisdictions involved, b) encoding the relevant knowledge to make it useable in a rules engine, and c) understanding and verifying the intent and interactions of all the rules as expected.

In practice, rules engines are almost never more useful than just coding things up normally in the language of your choice when encoding/building the logic for your product. You just have a few business rules that change within your company via conversations, projects, and people involved.

What they're actually useful for is when your product let's your product's users build up logic in some way that you need encoded and executable. In this case the rules are data from your customer. Think a state machine for a Jira ticket/help desk work flow that your customers define, or some workday process that walks your customer's users through new hire onboarding.

Re: Starbucks, monetary superpower

#76

Post by gruez »

ska wrote: post #47
gruez wrote: post #27

Earlier quoted context omitted.

How would you launder money with starbucks cards? Sure, you can transfer balances with them, but that alone doesn't help you launder money. According to the treasury dept: >First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the fin…

Basically anything that is directly exchangeable for cash or useful goods and services is useful for money laundering, I would imagine. If you can fill one with stolen CC details and then either cash out in a store or sell for a discount, that's a pretty basic launder, no?

>If you can fill one with stolen CC details and then either cash out in a store or sell for a discount, that's a pretty basic launder, no?

that just sounds like credit card fraud and fencing[1]. if you replaced starbucks card with something else that's valuable (eg. beats headphones), would you still call it money laundering?

[1] https://en.wikipedia.org/wiki/Fence_(criminal)

Re: Starbucks, monetary superpower

#77

Post by airstrike »

lwf wrote: post #59
maurimo wrote: post #31

I keep wondering why people buy Amazon/Netflix Gift cards. Great, you converted 50$ into 50$ that can only be used on Amazon, and people may end up not using at all. This is also financing with negative interest rate.

If you don't have a credit or debit card it's one of the only ways to pay for the service, save asking to borrow a friend's card. According to the FDIC, 6.5% of American households lacked a bank account at all in 2017.[1] [1]: https://www.fdic.gov/householdsurvey/

But you could always go with one those reloadable debit cards, no? Though those usually come with a fixed setup fee of, say, $5

Re: Starbucks, monetary superpower

#78

Post by xeromal »

bitwize wrote: post #11
jahbrewski wrote: post #2

Not so sure it's due to "coffee addicts" so much as the fact that Starbucks gift cards became the perfect, generic, gift. How many times have you been on your way to X, needed to bring a gift, and just run into Walgreens?

Starbucks coffee and espresso drinks are "will do in a pinch" for me. I'd much rather frequent a local coffee shop with better espresso than what Starbucks serves. I think Starbucks makes more money these days from its sugary cold drinks than its hot coffee/tea/espresso.

I think that for all of their drinks but the coldbrew. They have solid cold brew and I've tried nearly every artisan coffee shop in DTLA and the valley

Re: Starbucks, monetary superpower

#79

Post by clubm8 »

elandrum wrote: post #46
nlawalker wrote: post #23

One use of Starbucks gift cards not mentioned in the article: cashing out foreign currency. "When you’re leaving a foreign country and still have some of the local currency, take it to a Starbucks and load it onto a gift card. You can use the card later in the UK, USA, Canada, Australia, Mexico, and the Republic of Ireland." https://lifehacker.com/put-leftover-foreign-currency-on-a-st...

Just be cautious here... in some countries, Starbucks has to operate as a seperate entity and use a different gift card system. For instance, Malaysia Starbucks is a different entity and the gift cards do not work between other non-Malaysia Starbucks. (At least when I was there a few years ago.) This post from 2012 says where the gift cards must be used and redeemed in the same market: https://customerservice.starbuc…

I'm surprised FR, DE and ES can restrict the use of the card in the rest of the EU.

Re: Starbucks, monetary superpower

#80

Post by banana_giraffe »

airstrike wrote: post #77
lwf wrote: post #59

Earlier quoted context omitted.

If you don't have a credit or debit card it's one of the only ways to pay for the service, save asking to borrow a friend's card. According to the FDIC, 6.5% of American households lacked a bank account at all in 2017.[1] [1]: https://www.fdic.gov/householdsurvey/

But you could always go with one those reloadable debit cards, no? Though those usually come with a fixed setup fee of, say, $5

It's actually fairly hard to get money onto those without paying a fee (if you don't have a bank account). Most of the obvious ways to get money onto them involve "Visa ReadyLink", and that comes with a service fee from $2 to $5. If I recall correctly, some even have monthly fees if they get below a certain level.

Amazon gift cards can be purchased without a fee most of the time, and with less friction in the store then actually dealing with the service desk in the store that does ReadyLink.

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