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Starbucks Korea faces probe over US$153 million in prepaid card takings

South Korea’s financial regulator plans to begin a probe into Starbucks-issued unregistered pre-paid cards.

The Financial Supervisory Service has received a list of some 50 companies, including Starbucks Coffe Korea, which are operating an unregistered prepaid card system.

Starbucks allows customers to charge their Starbucks cards through its mobile app. Every time a certain amount is charged to the card, users receive points.

Under current laws, however, coffee shops are not eligible to register pre-paid systems. Starbucks, however, became an exception.

Rep. Hong Sung-kook from the Democratic Party said that Starbucks currently holds 180.1 billion won (US$153 million) of pre-paid charges, which surpasses Naver Pay (126.4 billion won) and Toss (130.1 billion won).

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, depriving the means of public monitoring even when companies appropriate customers’ prepaid charges for private purposes.

Starbucks, therefore, has been criticized for being in a blind spot of financial supervision.

“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.

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