After the "May 18 marketing" controversy, Starbucks Korea temporarily implemented a policy to refund 100% of prepaid card balances, intensifying debate over refunds for mobile gift cards. Consumers are complaining that other brands should also allow 100% refunds, but industry officials say intertwined interests with mobile gift card issuers, rather than individual brands' intent, make it realistically difficult.
According to the retail industry on the 9th, Starbucks Korea has been offering full refunds at customers' request for two weeks from the 1st, regardless of the proportion of the charged amount used. Previously, customers could receive a refund of the remaining balance only after using at least 60% of the charged amount. The move followed calls among some customers for withdrawing from the rewards program and refunding Starbucks card balances after the "Tank Day" marketing controversy on the 18th of last month.
Most coffee franchises and dining brands do not issue mobile gift cards themselves. Specialized issuers such as Kakao, KT Alpha, and GalaxiaMoneytree produce and sell the cards and settle with brands based on usage. Consumers recognize them as brand gift cards, but the actual authority over issuance, sales, settlement, and refund policies largely lies with the issuers. A dining franchise industry official said, "Except for some companies such as Starbucks, most brands do not issue gift cards themselves," adding, "Brands often just serve as redemption outlets, and refund policies also follow the issuer's operating standards."
By contrast, Starbucks operates its own app and prepaid card system. That allowed it to change its refund policy relatively flexibly. A coffee franchise industry official said, "Starbucks handles a large volume of prepaid funds and has a high share of its own platform, making policy changes relatively easy," adding, "Most brands are tied to contractual structures with external issuers, so it is not easy to change refund standards unilaterally."
Current mobile gift card refund standards are governed by the Korea Fair Trade Commission's standard terms and conditions for new-type gift certificates. If at least 60% of the face value is used (80% for gift cards of 10,000 won or less), the remaining balance can be refunded. However, full refunds before use or 100% balance refunds are not mandatory.
Consumers are seeking broader refund rights, but the industry is concerned that gift cards could effectively be used as cash substitutes. Industry officials explain that if refund rules are greatly eased, gift cards could be used more as a cash-out tool than as a gifting method. In particular, because the mobile gift card market connects issuers, platforms, and brands in a complex structure, some note it is not a problem that can be solved simply at the level of individual brands.
A retail industry official said, "If 100% refunds become the norm, there is a risk of buying gift cards and immediately cashing them out or abusing them through secondhand transactions," adding, "There is also concern that the original purpose of gift cards, as a gifting function, could be weakened."
After Starbucks said it would process 100% refunds, posts such as "Buying Starbucks e-cards" increased on secondhand platforms like Karrot Market and Bungaejangter. In response, Starbucks Korea halted sales of 100,000-won e-card vouchers across all channels. It also stopped sales of new unregistered physical cards and temporarily suspended exchanging e-card vouchers for unregistered Starbucks cards.
◇ How far should consumer rights be protected?... Rules vary by country
Major countries overseas do not guarantee unlimited refunds for gift cards. In the United States, there is no federal mandate for refunds, and only some states allow refunds of small remaining balances. Japan likewise has no refund obligation in principle and proceeds with reimbursement only in cases such as a business ending its service. By contrast, some European countries, including Germany, view gift cards as property from the perspective of protecting consumers' property rights and recognize holders' rights relatively broadly. Although systems differ by country, it is rare to determine the refundability of remaining balances based on a usage rate (60%) as in Korea.
The Korea Fair Trade Commission is also reviewing the need to improve related systems. At a press briefing at the Government Complex Sejong on the 26th of last month, Korea Fair Trade Commission Chair Ju Biung-ghi noted the need to reconsider mobile gift card refund standards, while expressing concern that "if the refund threshold is set too low, it could be abused for cashing out or cause side effects in terms of boosting domestic demand."
Lee Jong-woo, a professor in the Department of Distribution and Marketing at Namseoul University, said, "From the consumer's perspective, the standard of using more than 60% may feel excessive. However, it is also necessary to consider aspects such as revitalizing commercial districts and the potential for abuse through cashing out," adding, "This incident should spark public discussion so that government ministries and the industry can take time to discuss refund standards."